Transcription
There are new 100% tax write-offs now available under Trump's big beautiful bill. And in this video, I'm going to show you exactly how to use them to save a fortune in taxes.
Now, these write-offs may apply to vehicle purchases, equipment purchases, real estate purchases, and improvements, and much more. But here's the problem. Most people actually have no idea that these rules even exist or how to take advantage of them. Meanwhile, the ultra wealthy are already making strategic purchases that not only increase their wealth, but reduces their taxes at the same time.
So, as a licensed CPA that helps people tax plan around things like this every day at mycpa coach.com, I am going to give you a very simple guide to legally turn your purchases into 100% tax-deductible expenses that you can use to pay less in taxes and keep more of what you earn. So, if that sounds good to you, please like and save this video and stick around until the very end for everything that you need to know.
Okay. So, as a result of the latest tax law, we now have 100% bonus depreciation, 100% R&D expensing, 100% production building deductions, and so much more that will literally save taxpayers billions in taxes over the next decade. But rather than focus on the legal semantics and the technical jargon of all of these different provisions, I want to go straight to the specific purchases that you can make that qualify for 100% expensing according to these new rules.
So, let's start off with a very popular one that a lot of people are already talking about. Number one, 100% vehicle expensing. So, imagine writing off the entire cost of a new vehicle by simply using it in your trade or business. Well, the new tax rules will actually allow you to do this. So, let's go ahead and break this down.
First, please understand that the tax law is already very clear that if you use your car for business purposes, you can deduct it on your taxes. So, if there is a legitimate purpose for using the vehicle in your business in the pursuit of income, then you may be eligible to write off that vehicle on your taxes. And with 100% bonus depreciation, you may be able to expense the entire purchase price of a vehicle that is used more than 50% of the time for your business and placed in service after January 19th of 2025.
But even with 100% expensing, your deduction may be limited if it is what the IRS defines as a passenger automobile. And the IRS defines this as any four-wheeled vehicle that weighs less than 6,000 lb. Which means if you purchase a business vehicle that weighs more than 6,000 lb, your purchase may not be subject to those limitations and instead you may be able to write off 100% of the vehicle's purchase price with bonus depreciation. But this deduction is heavily scrutinized and you will want to make sure you follow all the rules on this if you are seriously considering this. So, just comment vehicles if you want the in-depth guide on those rules.
But for now, let's go ahead and move on to the next big write-off. Number two, equipment and machinery purchases, which are often required for many businesses to earn income to begin with. And these new rules now allow those business owners to claim larger deductions against these same purchases.
So whether you're a contractor who needs new tools, a restaurant owner buying kitchen equipment, or a dentist looking to upgrade your practice with new technology or new devices, all of those purchases can now be 100% tax-deductible in the year you buy them and place them into service in your business. This includes everything from computers and software to heavy machinery, furniture, and even specialized equipment that you may use for your specific industry.
For example, let's say you are a landscaper and you spend $100,000 on new landscaping equipment, trailers, and other things. Well, under the old rules, you would have to spread that deduction out over several years. But now you can potentially write off that entire $100,000 amount in one given year. Or maybe you are a photographer who invests $25,000 into things like new cameras, new lighting, and editing equipment. That entire purchase could also be 100% tax-deductible, which would give you a $25,000 write-off.
Now, the beauty of all of this is that it includes the full purchase price of the asset you're buying, including the delivery, the installation, the sales tax, even the setup cost. All of this gets rolled into your basis and can qualify for 100% expensing under bonus depreciation rules or even section 179. So, think carefully about your business and consider strategic asset purchases you can make that not only reduce your taxes, but also helps you earn more income through your business. When those two objectives are met, the purchase is usually a no-brainer for most people.
Now, another big write-off to consider is number three, real estate improvements and property purchases. And this is where things get really exciting, especially for property owners and real estate investors. So, if you own commercial property or rental real estate, certain improvements and upgrades you make can now qualify for immediate 100% expensing instead of being depreciated and spread out over five, 7, and 15 years.
For example, things like new appliances, new flooring, and furniture are typically considered to be 5-year property under IRS rules, which means that if you spent $50,000 on these types of improvements, you would only be able to deduct about $10,000 or so each year over the next 5 years. But with 100% depreciation, these improvements would qualify for 100% expensing in the year they are purchased and placed into service, which would increase this deduction up to $50,000. And this is just a simple example, but there are all types of different improvements that you can make that may qualify for this, like new fencing, landscaping, drainage systems, ceiling fans, and almost any other type of real estate improvement that qualifies as 5-year, 7-year, or 15-year property under IRS rules.
But what if you are buying an entire rental property or commercial property altogether? Well, in that case, you could conduct what is known as a cost segregation study, which will take that property and identify all components inside of it that may qualify as 5, 7, or 15-year property. And once it is identified, you can claim 100% depreciation against those components, as opposed to depreciating them evenly over the entire life of the building, which could be as high as 27 or 39 years depending on the type of property that you are purchasing.
Some of my clients are able to reduce their taxes to zero by implementing real estate strategies around things like this alone in doing absolutely nothing else, which is great because they are able to benefit from the appreciation of their real estate properties, plus any cash flow they may receive from them while also paying little to no taxes. Now, I have an entire playlist on this, so just comment real estate below for my in-depth guide and I'll send it to you.
But for now, let's move on to the next 100% write-off. Number four, manufacturing and production facilities. Now, this is a brand new one and absolutely game-changing for people who are manufacturers. So, under the new law, if you are building or buying a production facility, and we're not just talking about the equipment or improvements inside the actual building structure, then you may be able to write off 100% of that building in the first year. And we've never seen anything like this. We're talking about potentially millions of dollars in immediate tax deductions for qualifying production facilities.
But there are rules you have to follow here. First, it has to primarily be used for production activities. You also have to be an owner-user of that property. You can't lease it out. And there is a 10-year commitment required. So, if you're in manufacturing, food processing, or any business that involves a production process, this could be worth exploring with your tax professional.
But let's cover one other big one that just came back. Number five, 100% R&D expensing, which is big for any business owner planning to spend money on developing or improving any product, process, technique, formula, or software. The new tax rules will allow you to expense up to 100% of your domestic research expenses that you incurred on research and development activities related to those intentions. Plus, you will still be able to take advantage of the R&D tax credit on top of this, which may grant you an additional tax credit ranging up to 20% of qualified research expenses that you have over a certain amount.
Now, I have a full video that discusses the R&D requirements in great detail. So, if you want that, just comment R&D below and I will try to send it to you. And if you don't have a CPA to rely on to help you implement things like this to reduce your taxes, just apply to work with my team today at mycpa coach.com.