At more than $160,000, G-Wagons are hardly what most people think is a bargain — but for the rich, these luxury SUVs are dodging tax loopholes.
The so-called “Hummer Deduction,” Section 179, allows an automobile that weighs at least 6,000 pounds to count as a tax benefit in some cases. Tap it through your company, use it for business at least half the time, and the Mercedes G-class – or Cadillac Escalade (starts at $76K) or Infinity QX80 (from $70,000) – has can earn a $25,000 deductible in the first year of ownership.
The IRS treats such trips as property discounts, allowing for offsets, even though the initial benefit is not intended to help generate high rollers, according to the Scot Hall of Swapalease.com. It’s really for farm equipment like tractors; As our cars are getting heavier and heavier, the tax code can’t keep up.
“It’s a provision to encourage businesses to buy new equipment,” Hall told The Post, “The higher the vehicle weight, the more it tends to be a heavy-duty pickup. These days, however, there are more vehicles than people think they sneak in to qualify. ”
According to Asher Rubinstein, a partner at NYC-based Gallet Dreyer & Berkey, the “Hummer Deduction” isn’t the only 100% legal workaround that wealthy Americans use to offset the high-end lifestyle. their profits compared to Uncle Sam’s profits. protective tax practices.
Take the “August Rule,” its name refers to the town of Georgia, where landlords have long rented out their mansions during the spring PGA tournament there.
In the 1970s, residents lobbied the Federation to let them do it for a short period of time every year without operating as rental businesses — or paying taxes on what they charged. Now, anyone who owns multiple properties can rent out their primary residence at market rates for up to 14 days a year and earn tax-free profits.
There’s another flaw – the equivalent of one percent of overversion, that can be stacked, according to Rubinstein.
“To rent [your home] come to your business for a corporate holiday or monthly board meeting, and now the rental payment is deductible for the business and income tax free for you,” he said. like a bonus to both ends.”
Another temporary bonus that Rubinstein encourages people to realize this tax season: Business meals, which are traditionally 50% deductible, can now be counted in full – a move by the government government to try to force pandemic restaurant inspections.
“This is a lifeline that Congress has stoned to the restaurant industry,” he said of the measure, which expires at the end of the year. That means even first-growing Bordeaux and the four-course prize at Daniel’s are eligible, as long as the meeting and dining are related to work.
Do you have a closet full of Birkin or a few prized Picassos? There is also a tax solution for that. You can form your own 501(c)(3) family, then donate luxury goods to that new foundation. Donations are tax-deductible and the fund is tax-free on sales of merchandise.
Rubinstein has set up clients like this for everything from sculptures to stocks; Wealthy Cryptocurrencies are now asking if it’s applicable there.
Here’s how such systems work: Suppose you bought stock in Apple for $50 and it went up to $150. Selling those shares would normally trigger capital gains tax on $100 of profits. But if you donate those shares to the remaining charity – your personal 501(c)(3) – the tax situation will be much better after selling them.
“You can get an annual distribution, as long as you can demonstrate that 10% of this money will go to a qualifying charity,” says Rubinstein.
It works the same way for any property that appreciates, like a painting or a bag that increases in value each year: Family-controlled Article 501(c)(3) turns an item luxury into a gesture of good deed.
Want to recoup the cost of a senior family pet? According to Rubinstein, there is a chance to do that if the dog is a security animal. And when you spend six figures on a dog, that’s a welcome reduction.
Greene owns and operates Svalinn, a Montana-based dog training and breeding company, the Quantico breed. Well-trained graduates cost $125,000 each and double duty as lovable family pets and security guards, prepared to spot danger before it happens .
“A lot of people buy a dog as a business expense, because it is a legitimate security,” Greene told The Post. Like the Florida jeweler who keeps a dog Svalinn by her side in the store and when she walks to her car late at night. Doctors, too, are regular customers, she said, eager to be protected from a surprise visit from a disgruntled ex-patient.
“Unlike a mere pet dog, your personal guard dog is with you wherever you go. It’s your guardian angel,” Greene said.
It’s a reminder that there are actually different rules – or even a different game to play – when you’re rich.
“Some people may think you’re depriving the government of revenue, so there’s a moral obligation,” said Rubinstein, “but high net worth individuals are exploiting loopholes. juridical. If you are having a business meeting with a client, why should the deduction be limited to a mediocre bottle of Sonoma? Why can’t we open the first increments and deduct them instead? “
https://nypost.com/2022/03/02/tax-deductions-of-the-rich-g-wagons-wine-dinners-guard-dogs/ G-Wagons, wine parties, ‘guard’ dogs