Tax Deduction in Vehicle Use

[Baikuntha]

What is the name of your state? New York

I recently started real estate salesperson work (haven't had my first deal yet, still learning). Since I couldn't get any loan, my wife is buying a 8-seater minivan for me (she's the registered owner and loanee). Once we get the car, I'm also planning to use that minivan for Uber (immediately) and as a limo in next 3 to 4 months. So, I'll be doing both driving work & real estate sales. Now, will I be able to deduct the car payment and interest paid as my business expense when I'm using it as a limo/Uber? Can someone tell me how I can get the best tax benefit? Thank you.

 

[Taxing Matters]

You won't be the owner of the vehicle nor are you the borrower on the vehicle loan and that's a problem. You need to own/lease the vehicle and make the payments to get the tax benefits for your driving businesses. If you own the vehicle, though, see IRS publication 463 for information on deducting business vehicle expenses.

 

[LdiJ]

You won't be the owner of the vehicle nor are you the borrower on the vehicle loan and that's a problem. You need to own/lease the vehicle and make the payments to get the tax benefits for your driving businesses. If you own the vehicle, though, see IRS publication 463 for information on deducting business vehicle expenses.

What if they registered the car in both names?

 

[FlyingRon]

What if they registered the car in both names?

You mean titled.

 

[Baikuntha]

You mean titled.

Yes, is there a way to be a co-owner without being in the loan. Will I then be able to deduct car expenses (monthly payment etc.). What's the best way to do this? (Going to the dealer tomorrow). Thank you.

 

[FlyingRon]

Sure you can. In NY, the lien is recorded electronically and will persist even if you title the car to someone completely different. Your bank might have an issue with that but usually adding a spouse isn't a problem. You can't technically "add" someone in NY, but you can transfer to a new title that has both names on it.

Note that the registration doesn't need to have the same names as the title in NY. The owner must merely approve the registrant (not that this matters for tax purposes, which is why I made the comment to begin with).

Note well that anybody on the title can transfer the vehicle to someone else (it's the equivalent of the word "OR" between the names in other states. In NY all titles are "OR" titles).

 

[Baikuntha]

So, if I understand it correctly, I should go on tomorrow and get the vehicle in my wife's name (to satisfy bank) and then add my name in the title in a couple of weeks/months?

 

[Taxing Matters]

What if they registered the car in both names?

That could work, assuming that he is the one actually paying the vehicle expenses.

 

[adjusterjack]

I recently started real estate salesperson work (haven't had my first deal yet, still learning). Since I couldn't get any loan, my wife is buying a 8-seater minivan for me (she's the registered owner and loanee). Once we get the car, I'm also planning to use that minivan for Uber (immediately) and as a limo in next 3 to 4 months.

Since you don't have the vehicle yet, I strongly suggest that you rethink using it in the real estate business. Using it for Uber and for carrying passengers for business is called "public livery" in the insurance business and is excluded by your auto policy.

I think that Uber provides liability insurance on its drivers (check on it before you do it) but you'd be making a very dangerous mistake hauling passengers for the real estate business. Best to have your prospects do their own driving and meet you at properties rather give them rides.

 

[FlyingRon]

I'm not sure what his intent was for the RE business use of it. If he just intends to drive himself around to showings that is a different thing.
Note that the base UBER insurance is pretty lame, anybody with a shred of assets carries more protection. As AJ points out, Uber's coverage only covers you on trips done "on the app." If you intend to do limo work outside of Uber, you'll need and want specific coverage for that.

 

[LdiJ]

Since you don't have the vehicle yet, I strongly suggest that you rethink using it in the real estate business. Using it for Uber and for carrying passengers for business is called "public livery" in the insurance business and is excluded by your auto policy.

I think that Uber provides liability insurance on its drivers (check on it before you do it) but you'd be making a very dangerous mistake hauling passengers for the real estate business. Best to have your prospects do their own driving and meet you at properties rather give them rides.

Uber definitely makes insurance available to its driver's. I don't know that they limit it to liability. The drivers have to pay for it. I am uncertain why you feel it would be such a dangerous mistake to carry real estate clients. I agree that its not a good idea because the clients wouldn't have the freedom to simply terminate the day and head on home, but I don't understand the "very dangerous mistake" aspect.

 

[FlyingRon]

Sorry Ldij, you don't know what you're talking about.

Uber offers a liability rider over the driver's own insurance. There's no charge for this. It's only liability and over covers things WHILE you are transporting a fare. Uber doesn't offer anything else. If you need to, let's say, protect the car itself (collision coverage) while on Uber that your personal policy likely won't cover or get rental coverage or towing coverage or any of those comprehensive things, there are other insurers who cater to Uber/Lyft drivers.

 

[LdiJ]

Sorry Ldij, you don't know what you're talking about.

Uber offers a liability rider over the driver's own insurance. There's no charge for this. It's only liability and over covers things WHILE you are transporting a fare. Uber doesn't offer anything else. If you need to, let's say, protect the car itself (collision coverage) while on Uber that your personal policy likely won't cover or get rental coverage or towing coverage or any of those comprehensive things, there are other insurers who cater to Uber/Lyft drivers.

I am sorry Ron but I have multiple Uber drivers as tax clients and they are all paying for insurance provided on a group basis through Uber and showing up on the statements that the get from Uber as to their expenses. I am willing to concede that it might vary from state to state, but Uber definitely offers insurance to its drivers that they would pay for in my state.

 

[Taxing Matters]

I am sorry Ron but I have multiple Uber drivers as tax clients and they are all paying for insurance provided on a group basis through Uber and showing up on the statements that the get from Uber as to their expenses. I am willing to concede that it might vary from state to state, but Uber definitely offers insurance to its drivers that they would pay for in my state.

The problem is that the Uber insurance only covers the driver for the Uber rides. Regular personal auto insurance policies cover you for pleasure driving and commuting to and from work, but may not cover you as a real estate sales person transporting customers around. The personal policy would definitely not cover the OP for the side non-Uber limo business. What this means is that the OP would need to sit down with an insurance professional and figure out what kind of policies he/she needs to ensure that there is coverage for ALL the planned activities the OP wants to do with the vehicle.

 

[LdiJ]

The problem is that the Uber insurance only covers the driver for the Uber rides. Regular personal auto insurance policies cover you for pleasure driving and commuting to and from work, but may not cover you as a real estate sales person transporting customers around. The personal policy would definitely not cover the OP for the side non-Uber limo business. What this means is that the OP would need to sit down with an insurance professional and figure out what kind of policies he/she needs to ensure that there is coverage for ALL the planned activities the OP wants to do with the vehicle.

I do not disagree that the OP might need to have some extra insurance if they also intend to transport real estate clients.