Looking for some guidance. Are there any downsides Tax wise to paying off a new tractor early? Have a 60mo loan but can pay it off in 18mo. Is this a wise decision? Besides not being able to write off the interest charged on the loan are there any other downsides come tax season? Thanks for any help.
Early Loan Payoff
Discussion in 'Trucker Taxes and Truck Financing' started by savage02, Sep 23, 2014.
-
-
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
-
the upside of no worry about a tractor payment would outweigh any disadvantage to me.,
the interest savings would ooutweigh any tax savings and ya still got depreciation to deduct. -
Pay it off and stash away a truck payment every month and you'll upgrade with Cash next time. Or pay it off and put a truck payment into a retirement account and you can retire a wealthy man.
-
It might be best for you to sit down with a licensed CPA and or a financial planner. Before paying the tractor off, make sure that you have a pretty decent business savings account for any emergencies that might occur and a personal one as well. Also, make sure that you are paying yourself for retirement and make sure that you have all necessary insurance coverage such as medical, vision, etc. It probably is a good business decision to go ahead and pay it off after you take care of the previously mentioned list. Remember that the earlier you start saving for retirement and the more that you put in, the better off you will be in retirement.
blairandgretchen Thanks this. -
You still have depreciation on the tractor to deduct.
Deductions are only getting a portion back off the money outlaid - I say pay loans off early when possible.
Take the above post to heart - early retirement savings pays off big in the long run. -
First direct answer. Consult your tax accountant.
Make sure your loan does not have a early pay off penalty. Me I would pay off the loan as fast I could. Never know when the truck will breakdown. For that reason alone is why I paid mine off asap. Its bad enough having to wait for a truck repair and the bill. Not as bad waiting when there is no equipment payment.
The tax advantage of the interest deduction was minimal. For me the piece of mind far outweighed the interest deduction.blairandgretchen Thanks this. -
Thanks for the replies guys. This is my 1st go around being an owner operator. I have $25k set aside for emergency fund and have excellent medical dental and vision thru chamber of commerce. Took 2 401k's from years of being company driver and rolled them into a Roth IRA. Things have been going very well so far but I know there will be plenty of highs and lows on the road ahead. Just trying to reduce or eliminate any debt I can.
blairandgretchen Thanks this. -
Buy a new truck n pay off in 2yrs or 5yrs?
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.