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I am planning to purchase a vehicle in the coming months. I have a business of my own formed as a S-corp in Virginia. I will be using the vehicle to commute every day to and from work and for other client meetings.

I'm wondering what are some of the pro's and con's of purchasing a vehicle under my business as compared to personal?

Few that I'm interested in:

Pro: 100% of the vehicle cost is counted as a deductible towards my business

Con: I would have to pay personal property tax on the business vehicle but it seems that the tax rate for personal property and business property is the same for the county I live in (4.57 for each $100 assessed value)

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  • Using the vehicle to commute to work is not necessarily considered a business expense. You either have to reimburse the company for personal use of the business vehicle, or you need to count it as a fringe benefit--in which case, you must pay income tax on the value of that benefit. See irs.gov/publications/p15b/…
    – rob
    Nov 3, 2014 at 18:26

1 Answer 1

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Regarding vehicle property tax in Virgina. The big difference is that business vehicles don't get a tax break:

Under Virginia law -- the Personal Property Tax Relief Act of 1998 (PPTRA, also known as the "No Car Tax" legislation) -- the State planned to subsidize 100% of the taxes on personal use vehicle assessments below $20,000 by the year 2002. In passing this law, the State effectively pledged state revenue to pay local governments throughout the Commonwealth a subsidy in lieu of personal property taxes that local governments would have otherwise collected directly from taxpayers. At present, the State pays approximately 62% of the bill, and the taxpayer pays the remaining 38%. These rates are subject to change annually. The taxpayer must pay the full amount of taxes on any vehicle assessment that exceeds $20,000. Only personal use vehicles qualify for PPTRA.

If that vehicle is worth 20K then a business will pay 4.57% of 20,000, but an individual will pay 4.57% of 7,600. A difference of $566 per year.

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