What are the Tax Implications of Buying a Car?

Two individuals sit at a desk looking over documents

If you’re buying a car, you should be aware of what it could mean for your taxes. Planning for your taxes is the best way to prevent unwanted surprises and make sure you’re prepared for anything. Today in the LongSchaefer blog, we’ll talk about how buying or leasing a car will affect your taxes.

Sales Tax

The sales tax you pay on your car will be your biggest consideration. When you buy or lease a car, you will have to pay the sales tax when you go to get it registered. This is an expense that many first-time car buyers may not be aware of. Make sure you have enough money set aside when you buy or lease a new car to pay your sales tax as well.

Fortunately, the nice thing about sales tax on a car is you can claim it on your yearly taxes as a deduction. You should be able to claim both your sales tax and your registration fees. If you want these deductions available the next time you file your taxes, you may want to go ahead and get that car you’ve been looking at before December 31st. Waiting until after means you’ll have to claim your deductions on next year’s taxes instead, meaning the benefits aren’t as immediate.

Property Tax

Don’t forget you’ll need to pay your property taxes. Many states assess property tax on vehicles, so you’ll need to make sure to update your form to send into your assessor. You can remove any old cars off the form and add your new car. Forgetting to do this means they may not get an accurate assessment, and your property tax payment will be delayed.

Business Related

If you buy or lease a car for your business, or if you’re self-employed, you may be able to write off operating costs of the vehicle. This could include gas, repairs, and more. This is something you’ll want to run by a tax advisor because this can get fairly complicated. Luckily, you can always bring your taxes to the advisors at LongSchaefer. We’ll be happy to help you with your taxes, no matter how complicated they might be.

Contact LongSchaefer Today

The professionals on our team are here for you. Your taxes are our first priority and we have been offering experienced service in the Cincinnati, OH, area since 1981. We have won several awards for our services, and we would love to offer that same award-winning expertise to you. Call (513) 854-0217, or contact us online today for more information from our Cincinnati CPAs and trusted business advisors.

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest

May 2020 COVID-19 Update

In order to comply with the Ohio Health Department Order & CDC social distancing recommendations, our offices are closed until further notice. Rest assured that our established protocols and available technology will allow us to provide the same level of service and quality you expect from LongSchaefer during this time.

The SBA has announced details of how it’s helping small businesses through the Coronavirus outbreak. The IRS is sending payments to families affected by this crisis. 

Please click on our Coronavirus information pages for more information.