What are some ways in which the seasoned investors are reducing their taxable income?
Could purchasing a car be a tax write off?
Compotizing assets for depreciation
Starting a health, retirement, or benefit program
Investing through an IRA
to answer your question, yes a car can be a writeoff. but why spend $500 a month of hard-earned cash to “save” a few hundred bucks a year in tax?
most small investors worry too much about taxes and too little about cashflow.
Having enough income to pay tax is a good problem to have.
if you have enough income that taxes are a big issue for you, then you should have a competent CPA guiding you on:
taxation of different entities
retirement and benefit plans
legal and effective ways to convert non-deductible personal expenses into deductible business expenses.
Thanks mc and BLL.
The reason that I was asking about is because I had already been in the market for a car. I would be in the small investor category.
My thinking was that a 16-17k car (03 Accord) would save me about 2500ish in taxes.
I was only going to purchase the car cash or put 50% down to preserve cashflow. I have no debt at this time too which is nice.
Is my thinking off?
your math works only if the car is being used 100% for business. Commuting back and forth to your day job doesn’t count.
If you’re only using it 15% for business, then your tax savings reduce accordingly.
Now, if you’re going to buy the car anyway, you might as well save some taxes. I’m only saying don’t pay $17,000 just to “save” $2,500. That would be stupid.
I agree completely with Mark. If you are going to do something anyway, it might as well be tax deductable.
Accumulate a few rental properties. In this market, you should be able to find several deals for 6-70 cents on the dollar. The depreciation on $300k of rental properties alone would help offset some of your gains.