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Can interest paid on car loans be deducted?
My friend and I are looking at buying a truck and starting a landscaping business. Would the interest we’d pay on the loan for the vehicle be tax deductible?
Will Baldwin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Starting a new business is exciting—best of luck!
Yes, interest paid on
car loans
can be deducted if the vehicle is used for business purposes. In your case, it sounds like you’d qualify!A vehicle driven for personal use is another story. Interest paid on car loans for personal vehicles is not tax deductible.
So, if your truck will be driven for both business and personal use, you must carefully document the percentage of time the vehicle is used for each purpose. Then, when filing your taxes, you may deduct a percentage of the interest associated with the percentage of time the vehicle was used for your business.
To ensure you cover all your bases and qualify for the deduction, you may want to consult a tax expert prior to purchasing the truck. That way, you won’t run into any surprises come tax time.
Deducting the interest on your car loan isn’t the only way you can cut down on vehicle expenses. With the
Jerry
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