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Can I write off my Tesla as a business expense?

TL;DR

Yes, you can write off your Tesla as a business expense under certain conditions.

Detailed Answer

If you use your Tesla for business purposes, you may be able to write off some of the costs as a business expense. The IRS allows for the deduction of vehicle expenses incurred for business use. However, the vehicle must be used for business purposes more than 50% of the time to qualify for the deduction. The amount you can deduct depends on the percentage of time the vehicle is used for business. You can either use the standard mileage rate or the actual expenses method to calculate your deduction. The standard mileage rate is simpler, but the actual expenses method may allow for a larger deduction. It includes costs like depreciation, lease payments, registration fees, insurance, repairs, and gas. Personal use of the vehicle is not deductible. Also, if the vehicle is used for both business and personal use, only the business portion is deductible.

Where to Put It on the Tax Form

You can report this deduction on Form 4562, Depreciation and Amortization, and Schedule C, Profit or Loss from Business.

Real World Example

For example, if you're a real estate agent and you use your Tesla 100% for showing properties to clients, you can write off the entire cost of the vehicle. However, if you also use the Tesla for personal errands, you'll need to calculate the percentage of business use and only write off that portion.

Calculation Required

A calculation is required for this deduction.

To calculate the deductible portion, divide the number of miles driven for business by the total number of miles driven in the year. Multiply this percentage by the total cost of the vehicle to get the deductible amount.

Audit Risk & Documentation Tips

Keep detailed records of your business mileage, including dates, destinations, and the purpose of each trip. Also keep a copy of the purchase receipt for your Tesla. The IRS may scrutinize large deductions for vehicles, so accurate record-keeping is crucial.

IRS Reference

IRS Publication 463, Travel, Gift, and Car Expenses; IRS Publication 535, Business Expenses

Relevant Industries

FreelancersSmall BusinessReal EstateSales

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 3, 2025

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