To me, this all comes down to running the numbers. You need to identify what the expected return on the purchase will be, and then figure out if there is a potential tax deduction that can be utilized. Get your net result, and compare it with the projected returns on the other investment you’re considering. Don’t forget to consider inflation in your calculations too!
For example, what if your business requires a pickup truck for hauling or delivery or some other function (such as meeting clients). Did you know that if the GVWR (Gross Vehicle Weight Rating) is over 6,000 pounds, and the vehicle is used more than 50% for business purposes, then you can deduct up to $25,000 on your taxes (as of tax year 2014)? This is a huge incentive if you’re considering making a purchase like this. Some of the vehicles that qualify are Tahoes, Suburbans, Jeep Cherokees, Tundras, certain 4Runners, Rams, Expeditions, etc). Just check the specs to find out the GVWR ahead of time before you make the purchase.
If your income is in the higher brackets, then a deduction like this on a vehicle could put several thousand dollars in your pocket come tax-filing time!
Maybe you have a lot more cash available to invest, and you’re looking at an alternative to the mainstream Wall Street or real estate game. What about purchasing an active business instead? Again, if the numbers pencil out, this could be a huge win for your portfolio.
Or maybe you don’t have quite enough cash to bite off buying a business by yourself. Have you thought about alternative financing? Or going in together with trusted friends? There are creative ways to finance business acquisitions that would probably surprise you. I’ll give you a hint: one way involves business credit which does not impact your personal creditworthiness. I’ll save that discussion for another time.
For the win,