You’ll have to excuse the clickbait headline. We didn’t really get 30% off the sticker price. We paid full price for the car. The 30% number comes from using the tax code to our advantage.
Did you know that the tax code is 6,871 pages long (assuming around 450 words per page)? Of those pages, only a couple of them deal with how much we should pay in taxes. Most of the rest of those pages deal with how to AVOID paying taxes through deductions and credits.
Do you know who gets the most deductions and credits in the tax code? Business owners and real estate investors.
These folks can use the tax code to keep a lot more of their hard-earned money because money flows to them differently than a wage earner. A wage earner doesn’t make their income until their employer takes out federal and state income tax withholdings. An entrepreneur makes their income AND THEN pays taxes on that income.
So before we pay taxes, we can do things to offset those taxes and pay less. An example of that is this car. We needed a second vehicle for the business so that our new 16 year old driver can have a non-work vehicle to use. We bought this car as an equipment purchase for the business before the end of the year. Therefore we’ll get to take a deduction for the vehicle in the 2024 tax year.
How much will we take specifically? This vehicle has a curb weight of over 6,000lbs. Therefore it falls under Section 179 of the tax code, which deals with fleet vehicles. That section allows us to depreciate the whole cost of a vehicle put into service that year up to $30,500.
A $30,000 deduction amounts to about $10,000 worth of tax savings, or approximately 30%. That’s how we saved 30% on the cost of the vehicle.
How can you do this if you’re not a business owner? The easiest way to do that is to invest in real estate and create a business around that. As long as you use the vehicle 50% for work purposes, you can do this too.
Real estate investing isn’t just about creating wealth. It’s also about creating a business and using tools like the tax code to your advantage. Wealthy people play the income game to win. You can learn to do it too.