If you’re considering converting a personal vehicle to business use, you’re not alone.
Many business owners find this strategy beneficial—but it’s important to understand the
tax implications and documentation requirements to do it correctly.
💼 Why Convert a Vehicle to Business Use?
Converting a vehicle to business use can unlock valuable tax deductions, including:
Depreciation
Fuel and maintenance expenses
Insurance premiums
However, the IRS requires clear documentation to support the change in use and
ensure compliance.
📊 What Documentation Is Required?
To properly document the conversion, you’ll need to establish the vehicle’s fair market
value (FMV) as of the date it began business use. This FMV becomes the basis for
depreciation and other deductions.
Acceptable sources for FMV include:
Kelley Blue Book
Edmunds
NADA Guides
Be sure to capture the FMV on the conversion date, not the original purchase date.
🧾 What Happens Next?
Once the FMV is established, we’ll:
Record the vehicle as a business asset
Begin depreciation based on FMV
Track business vs. personal mileage (if applicable)
Ensure compliance with IRS substantiation rules
If the vehicle is used exclusively for business, the process is straightforward. If it’s
mixed-use, mileage logs become essential.📞 Need Help?
If you’re ready to convert your vehicle or have questions about how this affects your tax
strategy, contact us. We’ll guide you through the process and ensure everything is
documented correctly.