The Mercedes Benz G-Wagon is iconic, luxurious and expensive. Is there really a way to write off a G Wagon on your taxes? It has to be like a myth… urban legend. There’s no way you can buy a G Wagon and write off the cost on your tax return. Or can you?
Believe it or not, real estate investors and other business owners can write off Mercedes-Benz G-Wagon’s and other vehicles weighing more than 6,000 lbs. That’s right. The IRS tax code in Section 179 allows you to do just that. When you factor in how much a G Wagon costs, $150,000 – $370,000, that’s a pretty big write off! The G Wagon tax write off is just one of many write offs you can take with section 179.
Section 179 Deduction Explained
What exactly is the section 179 deduction?
The IRS Section 179 deduction is a tax incentive designed to encourage businesses to invest in tangible assets. It allows businesses to deduct the cost of qualifying property from their taxable income in the year the property is placed in service. This deduction applies to a wide range of assets, such as machinery, real estate, equipment, vehicles, and certain software. And yes, section 179 even allows for a G Wagon tax write off!
The key benefit of the Section 179 deduction is that it enables businesses to accelerate depreciation, providing immediate tax relief rather than spreading the deduction over several years. However, there are annual limits on the total amount of qualifying property expenses that can be deducted. In addition, businesses must meet specific criteria outlined by the IRS to qualify for the deduction. It’s a valuable tool for businesses looking to invest in and upgrade their assets while enjoying tax advantages.
Does Your Vehicle Qualify?
For a vehicle to qualify for the Section 179 tax deduction, it must meet certain criteria.
- Business Use Percentage: The vehicle must be used for business purposes more than 50% of the time. This means that if the vehicle is used for both personal and business purposes, the business use must be greater than 50% to qualify for the Section 179 deduction.
- 100% Business Use: If you are using the vehicle for 100% business use, you may be eligible for a bigger deduction. Up until the conclusion of 2022, these vehicles benefited from a 100% bonus depreciation. That meant you could write off the entire purchase price in the first year it was placed in service. However, commencing in 2023, there will be a reduction in the bonus depreciation rate to 80%, followed by 60% in 2024, 40% in 2025, 20% in 2026 until it phases out in 2027.
- Weight Limitations: The IRS sets specific weight limits for vehicles. Generally, vehicles with a gross vehicle weight rating (GVWR) above 6,000 pounds may qualify for the Section 179 deduction. This weight requirement is in place to ensure that the deduction applies to vehicles primarily used for business purposes rather than personal use.
- Specific Types of Vehicles: Certain types of vehicles, such as heavy trucks, vans, and SUVs, may qualify for the Section 179 deduction. However, there are limits on the deduction amount, and the vehicle must be used for business purposes.
- Listed Property Rules: Vehicles are considered “listed property” by the IRS, and special rules apply. Documentation of business use, such as a mileage log, is often required to support the deduction.
It’s crucial to stay informed about any updates or changes to tax laws, as they can impact the eligibility of vehicles for the Section 179 deduction. Consultation with a tax professional or accountant is recommended to ensure compliance with current regulations and to maximize potential tax benefits.
Section 179 Vehicle List 2024
Contrary to what you may think, eligibility for Section 179 isn’t limited to the purchase of a heavy-duty truck. In 2024, qualifying vehicles under Section 179 encompass not only trucks but also SUVs, G Wagons, and even certain cars. Numerous vehicles meet the minimum 6,000-pound threshold, providing a diverse range of options for businesses looking to benefit from this tax deduction.
Here is the updated section 179 vehicle list for 2024:
| MAKE | MODEL | GVW (LBS) |
| Audi | Q7 | 6,900 |
| Audi | SQ7 | 6,900 |
| Audi | Q8 | 6,900 |
| Audi | SQ8 | 6,900 |
| BMW | X5 xDrive45e | 7,165 |
| BMW | X6 M50i | 6,063 |
| BMW | X7 xDrive40i | 7,143 |
| BMW | X7 M50i | 7,143 |
| BMW | X7 M50d | 7,143 |
| Bentley | Bentayga | 7,275 |
| Bentley | Bentayga Hybrid | 7,165 |
| Bentley | Bentayga Speed | 7,275 |
| Bentley | Flying Spur | 6,724 |
| Bentley | Flying Spur V8 | 6,724 |
| Bentley | Flying Spur W12 | 6,724 |
| Bentley | Mulsanne | 6,173 |
| Bentley | Mulsanne Speed | 6,173 |
| Bentley | Mulsanne Extended | 6,617 |
| Buick | Enclave Avenir AWD | 6,160 |
| Buick | Enclave Avenir FWD | 6,055 |
| Buick | Enclave Essence AWD | 6,160 |
| Buick | Enclave Essence FWD | 6,055 |
| Cadillac | Escalade | 7,100 |
| Cadillac | Escalade ESV | 7,300 |
| Cadillac | Escalade Platinum | 7,100 |
| Cadillac | Escalade ESV Platinum | 7,300 |
| Chevrolet | Silverado 2500HD | 10,000 |
| Chevrolet | Silverado 3500HD | 14,000 |
| Chevrolet | Silverado 4500HD | 16,500 |
| Chevrolet | Silverado 5500HD | 19,500 |
| Chevrolet | Silverado 6500HD | 23,500 |
| Chevrolet | Express Cargo Van 2500 | 8,600 |
| Chevrolet | Express Cargo Van 3500 | 9,900 |
| Chevrolet | Express Passenger Van | 9,600 |
| Chevrolet | Suburban | 7,800 |
| Chevrolet | Tahoe | 7,400 |
| Chevrolet | Traverse | 6,160 |
| Chrysler | Pacifica | 6,055 |
| Dodge | Durango | 6,500 |
| Dodge | Durango SRT | 6,500 |
| Dodge | Durango Citadel | 6,500 |
| Dodge | Durango R/T | 6,500 |
| Dodge | Durango GT | 6,500 |
| Dodge | Durango SXT | 6,500 |
| Dodge | Grand Caravan | 6,055 |
| Ford | Expedition | 7,450 |
| Ford | Expedition MAX | 7,700 |
| Ford | F-250 Super Duty | 10,000 |
| Ford | F-350 Super Duty | 14,000 |
| Ford | F-450 Super Duty | 16,500 |
| Ford | F-550 Super Duty | 19,500 |
| Ford | Transit Cargo Van T-250 HD | 9,070 |
| Ford | Transit Cargo Van T-350 HD | 10,360 |
| Ford | Transit Passenger Wagon | 10,360 |
| GMC | Sierra 2500HD | 10,000 |
| GMC | Sierra 3500HD | 14,000 |
| GMC | Sierra 3500HD Denali | 14,000 |
| GMC | Sierra 4500HD | 16,500 |
| GMC | Sierra 5500HD | 19,500 |
| GMC | Sierra 6500HD | 22,900 |
| GMC | Yukon | 7,300 |
| GMC | Yukon XL | 7,800 |
| Honda | Odyssey | 6,019 |
| Infiniti | QX80 | 7,385 |
| Jeep | Grand Cherokee | 6,500 |
| Jeep | Grand Cherokee SRT | 6,500 |
| Jeep | Grand Cherokee L | 6,500 |
| Jeep | Wrangler Unlimited | 6,500 |
| Jeep | Gladiator Rubicon | 6,250 |
| Land Rover | Defender 110 | 7,165 |
| Land Rover | Defender 90 | 7,055 |
| Land Rover | Discovery | 7,165 |
| Land Rover | Discovery Sport | 6,724 |
| Land Rover | Range Rover | 7,165 |
| Land Rover | Range Rover Sport | 7,165 |
| Land Rover | Range Rover Velar | 6,724 |
| Land Rover | Range Rover Evoque | 6,724 |
| Land Rover | Range Rover Evoque R-Dynamic | 6,724 |
| Lexus | LX 570 | 7,000 |
| Lincoln | Aviator | 6,001 |
| Lincoln | Aviator | 6,001 |
| Lincoln | Navigator | 7,200 |
| Mercedes-Benz | GLS 580 4MATIC | 6,768 |
| Mercedes-Benz | GLS 600 4MATIC | 6,768 |
| Mercedes-Benz | G 550 4×4 Squared | 7,057 |
| Mercedes-Benz | GLS 580 4MATIC | 6,768 |
| Mercedes-Benz | GLS 600 4MATIC | 6,768 |
| Mercedes-Benz | AMG G 63 4MATIC SUV | 6,724 |
| Nissan | Armada 2WD/4WD | 7,300 |
| Nissan | NV 1500 S V6 | 8,550 |
| Nissan | NVP 3500 S V6 | 9,100 |
| Nissan | Titan 2WD S | 7,300 |
| Porsche | Cayenne Turbo Coupe | 6,173 |
| Porsche | Cayenne Turbo S E-Hybrid Coupe | 6,173 |
| Porsche | Cayenne Turbo S E-Hybrid | 6,173 |
| Porsche | Panamera Turbo S E-Hybrid | 6,244 |
| Tesla | Model X | 6,000 |
| Toyota | Tundra 2WD/4WD | 6,800 |
| Toyota | 4Runner 2WD/4WD LTD | 6,300 |
| Toyota | Tundra 2WD/4WD | 6,800 |
As you can see, the Mercedes-Benz G Wagon qualifies for the tax write off along with several other trucks and large SUV’s. The IRS does not specify the type of business you have to own, you just have to be a business owner. In other words, even if you never use the truck to tow or haul anything, as long as you are using it for 100% business use, you can qualify for write off. The G-Wagon tax write off is not here to stay unfortunately – so act now before the it phases out in 2027.
Another Awesome Tax Deduction
There are several tax strategies that you can take advantage of if you are a business owner or real estate professional. One of our favorite is investing your money into real estate. Just like buying a vehicle, there large deductions you can take in the year you purchased the property. Let’s take a closer look.
What exactly is bonus depreciation in real estate?
Bonus depreciation is a tax incentive that allows businesses, including real estate investors, to accelerate the depreciation of qualifying property. This allows businesses to take larger depreciation deductions in the first year the property is placed in service. This incentive is often used to stimulate economic growth by providing businesses with immediate tax relief for their capital investments.
Here’s how bonus depreciation works in the context of real estate:
- Qualifying Property:
- Bonus depreciation is typically available for qualified property with a recovery period of 20 years or less under the Modified Accelerated Cost Recovery System (MACRS). This includes items like machinery, equipment, and, importantly for real estate, certain improvements to the interior of non-residential buildings.
- Timing of Bonus Depreciation:
- Bonus depreciation allows businesses to deduct a significant percentage of the cost of qualifying property in the first year it is placed in service. In recent years, this percentage has been 100%, meaning that the entire cost of the qualified property can be deducted in the year it is acquired and placed in service.
- Note: Just like the G-Wagon tax write off, bonus depreciation is being phased out and deductions are 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026 before it’s completely phased out in 2027.
- Real Estate and Bonus Depreciation:
- The Tax Cuts and Jobs Act (TCJA) expanded bonus depreciation to include “qualified improvement property” (QIP) made to the interior of non-residential buildings after September 27, 2017. This includes improvements like interior renovations, but not expenses related to enlarging the building, elevators, escalators, or the internal structural framework.
- Section 179 vs. Bonus Depreciation:
- While Section 179 allows businesses to deduct the full cost of qualifying property in the year it is purchased, there are limits to the amount that can be expensed. Bonus depreciation, on the other hand, has historically allowed for a 100% deduction without the same dollar limits.
- Recapture:
- It’s important to note that bonus depreciation benefits are not without consequence. If the property is sold or disposed of before the end of its useful life, there may be a “recapture” of the bonus depreciation claimed. This means that a portion of the previously deducted amount may be added back to the taxable income in the year of the sale.
We wrote an entire article on bonus depreciation (cost segregation) here. We even included a bonus deprecation example so you can see potential tax savings.
Real estate investors and businesses should work closely with tax professionals to navigate the complexities of bonus depreciation and determine the best strategy based on their specific circumstances.
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