Hannah Hammond bought a quarter-million-dollar Mercedes G-Wagon using a tax loophole: vehicles over 6,000 pounds qualify for 100% bonus depreciation, letting her write off the entire purchase and save roughly $100,000 in taxes. She orders directly from the manufacturer at MSRP to avoid dealer markups, so the car holds its value for resale.
Chapters
Hannah, how do you justify buying a quarter million dollar vehicle? Well, here's why. I had a tax problem because of bonus depreciation. If you are a business owner and you buy a vehicle for business use, you can accelerate the depreciation of that vehicle and end up getting tax savings that year you buy it. I had a tax problem. I was looking for additional depreciation to reduce my taxable income. And because this G-Wagon is over 6,000 pounds and I use it for my business use, I was able to take 100% depreciation, accelerate the depreciation on this car, which allowed me to reduce my taxable income by the amount of the purchase price of the vehicle. It ended up saving me around $100,000 in taxes. Beyond that, it's also my dream car. I love it. And because I had the $100,000 in tax savings for a $3,000 a month payment, that was a decision worth making. Now, the third reason I bought this car and the strategy that I use— I ordered these G-Wagons from the manufacturer, so I get them at MSRP. As soon as a G-Wagon hits the lot and it's a new G-Wagon, they up the sticker price by a lot of money. I order these cars and I'm patient and I wait for the car to come in, and then I'm able to able to sell my previous G-Wagon. Since I ordered that car and got it for MSRP, it is an asset because it's actually worth more than I paid for it immediately when I buy it. And so when I go in down the road to trade it in, I don't actually lose a lot of money, and I'm able to sell it for more when I go to sell it. Those are the 3 reasons why I decided to spend so much money on a vehicle.