Hi Mark & Matt. Thanks for another year full of great advice.
I’m 27 and I work a full-time W2 job, but also own a rental property, sell a bit online (only ~$5k annual profits on $40k revenue), and drive for Uber.
I had purchased a vehicle (Camry, sub-6000lb) in the Summer and this personal vehicle for Uber driving as well. I’ve always used the mileage deduction in the past but feel I should be doing actual this year. I’ve heard you speak to the Section 179 rule and I was wondering if it might be possible to take advantage of the bonus depreciation in 2022 even though the vehicle is part personal use? I would say the mix is 60% business / 40% personal based on YTD mileage.
If I can, could the bonus depreciation on the vehicle also be applied against the income from the rental property and the online sales as well? Or is it limited to just the earnings from Uber driving? There are no LLCs set up for any of these, if that matters for answering the question.
I’ve looked into this a fair bit so I’l take a shot. Yes, you can still use 179 and bonus depreciation on vehicles that are split between personal and business, as long as the business use is at least 50%. The amount you can deduct is proportionate to the amount that is business use. But “I would say…” is not going to hold up in an audit, for proving how much of the usage is business vs personal. You need to show some good record keeping.
LLCs or not, splitting an actual use deduction between multiple businesses might not even be possible, but certainly seems like a very complicated feat to attempt even if technically possible. So if you’re able to put “Uber-driving online-selling landlord” all under one business? Then it might work. Whether you can or should keep all those under a single business is another question.