Is paid for equipment better or is depreciation?

Discussion in 'Trucker Taxes and Truck Financing' started by OldeSkool, Nov 22, 2021.

  1. OldeSkool

    OldeSkool Road Train Member

    Jul 17, 2018
    Just curious what you have found works for you. My goal when I started trucking was to get a paid for truck, but every CPA I use tells me I better have depreciation if I don’t want to pay tremendous taxes.

    I’m curious if any of you have done both, and if it really is a lot higher taxes to run paid for equipment. Obviously it depends how much repair cost you have I know, but just looking for opinions.
    D.Tibbitt Thanks this.
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  3. woolybully35us

    woolybully35us Light Load Member

    Mar 13, 2015
    paid off is better. you don't have to worry about making payments if it slows down. i rather pay the kgb i mean the irs. 30% of $1500.00 every month and put the rest in my pocket. than $1500.00 in some bankers pockets.
  4. skallagrime

    skallagrime Road Train Member

    Apr 10, 2012
    You can depreciate the value of anything either in one year or spread out, with a new (ish) truck, the purchase value to depreciate is larger, but you have far less in any repairs etc to do.

    An old truck will have a ton of writeoffs in repairs and maintenance, but significantly lower payment.

    Bottom line is that depreciating new for the first 3 years is easy, but if you dont sell it and reinvest into another new one, youre trading tax payment for truck payment.
    OldeSkool and bzinger Thank this.
  5. LameMule

    LameMule Medium Load Member

    Jan 19, 2020
    Paid off is best in my opinion so you don't feel obligated to haul cheap freight just to make a truck payment.
  6. bzinger

    bzinger Road Train Member

    Dec 10, 2014
    omaha , ne
    With the economic storm that I think is coming there is no way I would want a truck payment now , and there are lots of ways to shove money into a paid off truck .
    Maintance and attention to detail is the key and with 981k on my cascadia now it still looks like a 400k truck and I'm not bashful about upgrades either ... new minimizer half fenders going on next week .
  7. RunningAces

    RunningAces Heavy Load Member

    Jul 2, 2017
    In all aspects of life I prefer paid off. Trucking business, mortgage, etc. In some cases you can beat the system with big loans like mortgages when you can get a very low rate, high inflation, and tax benefits. I put peace of mind over all that because no matter what happens if you've got a paid off home at least you and your family won't be homeless. Of course you'll always have to pay property taxes which is a scam but that's another story...

    A paid off truck/trailer/1 yr insurance also grants a man the very important option of throwing his hands in the air and saying #### you all, I'm going home. Belive me when I tell you when things are going wrong it's good to have the option to take your ball and leave.
  8. GYPSY65

    GYPSY65 Heavy Load Member

    Nov 16, 2012
    SW FLA
    I agree
    Watch the tax advantage but like you say, being able to walk has a lot satisfaction

    I’ve raised all of our kids to never be married to their jobs, be better than the guy signing your check and always have $$ to just walk away
    Too many people hate life due to traps

    I’m 56. Maybe only had a “job” for 3 months
    Everything else I’ve done I’ve worked hard at. Made good $$ and always was able to walk , although 90% of my life I’ve been self employed which helps but in all that time I’ve never had that job. Maybe a bad day here and there but always liked going to work
  9. BennysPennys

    BennysPennys Medium Load Member

    Sep 24, 2021
    The best would be to pay cash for an asset then depreciate it, putting aside the money into a savings account to pay cash again.
  10. OldeSkool

    OldeSkool Road Train Member

    Jul 17, 2018
    I’ve been thinking about doing something like that. The truck I bought a year and a half ago has gone up $30-$50,000 according to what they are on TruckPaper. I’m about ready to sell it and go cash out an older pre emissions truck if the taxes wouldn’t put me 6 feet under.
    blairandgretchen and BennysPennys Thank this.
  11. Catmando

    Catmando Road Train Member

    Mar 15, 2021
    My truck has been paid off for a long time.. I trade trailers every 3 years for tax reasons.. I have 3 different trailers so I end up trading a trailer every year.. I also keep a project truck around.. that always relieves me of any major tax issues
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