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Lease a car to Uber driver?

songoku

Well-Known Member
Dear @UberTaxPro ,

I just want to ask a question about the tax situation if I lease out my car to an Uber driver? Let say I'm building a fleet and lease it out to fellow drivers that need cars to drive. I have been searching about this on the forum.

@can I deduct the mileage that driver driven with the IRS?
@Insurance?
@Oil change and maintenance?
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year?

Thank you in advance.
 

Yulli Yung

Well-Known Member
Dear @UberTaxPro ,

I just want to ask a question about the tax situation if I lease out my car to an Uber driver? Let say I'm building a fleet and lease it out to fellow drivers that need cars to drive. I have been searching about this on the forum.

@can I deduct the mileage that driver driven with the IRS?
@Insurance?
@Oil change and maintenance?
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year?

Thank you in advance.
I definitely would not do it. But to answer your question, no you cannot deduct the drivers expenses which include insurance, gasoline, mileage, maintenance and so forth.
 

songoku

Well-Known Member
  • Thread Starter Thread Starter
  • #3
I definitely would not do it. But to answer your question, no you cannot deduct the drivers expenses which include insurance, gasoline, mileage, maintenance and so forth.
Are you sure about this?

Let say driver pay me $500 per week to rent my surburban ( insurance included). Driver can deduct his expense + gas+ rental payment.

What can I deduct from $2000 per month he pays me for the rental. I take care of the car insurance + maintenance.

Thinking about doing that but I need to get the right info to make it right at the beginning?
 

kingcorey321

Well-Known Member
your NOT going to profit .
yes you can claim rental gas insurance . this is nothing you still will be paying rental charges and state and federal tax.
your making less then a dollar a mile already not including your rental and gas. will say a person rents a car drove uber full timea fter gas rental fees there profiting about 8 bucks an hour minus income tax so actual take home will say a person worked 12 hours a day 7 days a week with this rental 84 hours a week .672 dollars gross after rental and fuel . tax is about 85 bucks per 400 . so thats a profit of 540 for 84 hours .actual profit of 6.42 per hour after tax. is this worth it to you ? my data is from experience.
a rule i set up i no longer drive uber x or lyft its not worth it . i wont even turn the app on.
i only deliver food if the delivery pays me less then a dollar a mile its not worth it .
 

songoku

Well-Known Member
  • Thread Starter Thread Starter
  • #5
your NOT going to profit .
yes you can claim rental gas insurance . this is nothing you still will be paying rental charges and state and federal tax.
your making less then a dollar a mile already not including your rental and gas. will say a person rents a car drove uber full timea fter gas rental fees there profiting about 8 bucks an hour minus income tax so actual take home will say a person worked 12 hours a day 7 days a week with this rental 84 hours a week .672 dollars gross after rental and fuel . tax is about 85 bucks per 400 . so thats a profit of 540 for 84 hours .actual profit of 6.42 per hour after tax. is this worth it to you ? my data is from experience.
a rule i set up i no longer drive uber x or lyft its not worth it . i wont even turn the app on.
i only deliver food if the delivery pays me less then a dollar a mile its not worth it .
Thank you very much but it doesnt answer my question at all. Why would people rent out TLC cars to drivers if they couldn't make profit from the investment, considering they pay upfront close to $50k for each Suburban.
 

UberTaxPro

Well-Known Member
Past Sponsor
Dear @UberTaxPro ,

I just want to ask a question about the tax situation if I lease out my car to an Uber driver? Let say I'm building a fleet and lease it out to fellow drivers that need cars to drive. I have been searching about this on the forum.

@can I deduct the mileage that driver driven with the IRS?
@Insurance?
@Oil change and maintenance?
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year?

Thank you in advance.
@can I deduct the mileage that driver driven with the IRS? Yes if you elect to use the mileage method and operate less than 5 vehicles, no if you elect or have to use the actual expense method.
@Insurance? No with the mileage method, yes with actual expense method
@Oil change and maintenance? No with mileage method, yes with actual expense method
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year? Quickbooks, you'll need to pay attention to taxes a bit more than once a year. The help of an accountant might be a good idea to at least get you started out correctly.
Post automatically merged:

Are you sure about this?

Let say driver pay me $500 per week to rent my surburban ( insurance included). Driver can deduct his expense + gas+ rental payment.

What can I deduct from $2000 per month he pays me for the rental. I take care of the car insurance + maintenance.

Thinking about doing that but I need to get the right info to make it right at the beginning?
Yes, the way you set this up in the beginning is very important.
 

oldfart

Well-Known Member
Dear @UberTaxPro ,

I just want to ask a question about the tax situation if I lease out my car to an Uber driver? Let say I'm building a fleet and lease it out to fellow drivers that need cars to drive. I have been searching about this on the forum.

@can I deduct the mileage that driver driven with the IRS?
@Insurance?
@Oil change and maintenance?
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year?

Thank you in advance.
I’m considering doing this too
My thought is that the driver can deduct the lease payments and you would declare the lease payments as income.

As to tax deductions... if you do all the maintenance and provide insurance and pay for gas I think you would get to deduct the standard milage deduction.but if you split expense, you each can deduct your actual expenses.

I’m no accountant so I will be consulting an accountant before I buy the first car

I will also consider leasing the cars to two drivers. A day shift and a night shift ie keep them running 24 hours a day
 

songoku

Well-Known Member
  • Thread Starter Thread Starter
  • #8
@can I deduct the mileage that driver driven with the IRS? Yes if you elect to use the mileage method and operate less than 5 vehicles, no if you elect or have to use the actual expense method.
@Insurance? No with the mileage method, yes with actual expense method
@Oil change and maintenance? No with mileage method, yes with actual expense method
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year? Quickbooks, you'll need to pay attention to taxes a bit more than once a year. The help of an accountant might be a good idea to at least get you started out correctly.
Post automatically merged:


Yes, the way you set this up in the beginning is very important.

Thank you so much for your valuable feedback. I am assuming there are 2 methods for tax write off.

@The mileage deduction is more suitable for UberX to maximize their incomes.
@actual expense. I'm going to do more research on these. Looks like it better for higher end rides and BlackSUV fleet owner or driver.

Meanwhile, if you have the time. Can you point out for me this example:

In ideal situation: I get paid 2000 per month from driver for my 2019 black Suburban...or $24000 a year. He can drive the wheel off if he would like too.
With the actual expense method, what can I deduct from these expenses:

@For the $45k Suburban, I put a down payment of $20k and monthly payment is close to $500 per month in 5 years.

@Pay close to $400- $500 per month for a proper commercial insurance. The driver is insured under my policy.

@Maintenance cost: this is complicated but hopefully let put aside $100 per month.

@Vehicle depreciation, this is complicated but give the $45k truck 3 year of service which is $15k per year in depreciation. I dont think he will drive X considered the gas expense but who know. Hopefully it gives me 4.5 years of service equal to potential income $100k from the Truck. How much can I deduct from my income?

The math is kinda off here. But I'm doing more research. Meanwhile, please shine me some light so I can get it start asap.

Bests,
 

UberTaxPro

Well-Known Member
Past Sponsor
Thank you so much for your valuable feedback. I am assuming there are 2 methods for tax write off.

@The mileage deduction is more suitable for UberX to maximize their incomes.
@actual expense. I'm going to do more research on these. Looks like it better for higher end rides and BlackSUV fleet owner or driver.

Meanwhile, if you have the time. Can you point out for me this example:

In ideal situation: I get paid 2000 per month from driver for my 2019 black Suburban...or $24000 a year. He can drive the wheel off if he would like too.
With the actual expense method, what can I deduct from these expenses:

@For the $45k Suburban, I put a down payment of $20k and monthly payment is close to $500 per month in 5 years.

@Pay close to $400- $500 per month for a proper commercial insurance. The driver is insured under my policy.

@Maintenance cost: this is complicated but hopefully let put aside $100 per month.

@Vehicle depreciation, this is complicated but give the $45k truck 3 year of service which is $15k per year in depreciation. I dont think he will drive X considered the gas expense but who know. Hopefully it gives me 4.5 years of service equal to potential income $100k from the Truck. How much can I deduct from my income?

The math is kinda off here. But I'm doing more research. Meanwhile, please shine me some light so I can get it start asap.

Bests,
@For the $45k Suburban, I put a down payment of $20k and monthly payment is close to $500 per month in 5 years. Cost of the vehicle is deductible not the payments. The first year could be up to the full $45K using the section 179 deduction depending on the vehicle and what it is used for. For research: vehicles and section 179. This is the tempting part about using the actual expense method but be warned that you'll pay dearly for this after the first year. Also, if you stop operating this business before 5 years you'll have to re-capture (pay back) much of the write off you took in year 1. Be very careful about this.

@Pay close to $400- $500 per month for a proper commercial insurance. The driver is insured under my policy. Under actual expense method business insurance is 100% deductible

@Maintenance cost: this is complicated but hopefully let put aside $100 per month. Actual money you spend on maintenance is deductible, not the budgeted amount.

@Vehicle depreciation, this is complicated but give the $45k truck 3 year of service which is $15k per year in depreciation. I dont think he will drive X considered the gas expense but who know. Hopefully it gives me 4.5 years of service equal to potential income $100k from the Truck. How much can I deduct from my income? If you use section 179 and or bonus depreciation you'll be taking 5 years worth(or close to it) of depreciation in the first year. Your deductions including depreciation will be limited after the first year using the actual expense method.
 

songoku

Well-Known Member
  • Thread Starter Thread Starter
  • #11
@For the $45k Suburban, I put a down payment of $20k and monthly payment is close to $500 per month in 5 years. Cost of the vehicle is deductible not the payments. The first year could be up to the full $45K using the section 179 deduction depending on the vehicle and what it is used for. For research: vehicles and section 179. This is the tempting part about using the actual expense method but be warned that you'll pay dearly for this after the first year. Also, if you stop operating this business before 5 years you'll have to re-capture (pay back) much of the write off you took in year 1. Be very careful about this.

@Pay close to $400- $500 per month for a proper commercial insurance. The driver is insured under my policy. Under actual expense method business insurance is 100% deductible

@Maintenance cost: this is complicated but hopefully let put aside $100 per month. Actual money you spend on maintenance is deductible, not the budgeted amount.

@Vehicle depreciation, this is complicated but give the $45k truck 3 year of service which is $15k per year in depreciation. I dont think he will drive X considered the gas expense but who know. Hopefully it gives me 4.5 years of service equal to potential income $100k from the Truck. How much can I deduct from my income? If you use section 179 and or bonus depreciation you'll be taking 5 years worth(or close to it) of depreciation in the first year. Your deductions including depreciation will be limited after the first year using the actual expense method.
Thank you so much.

@How should I use section 179 if I plan in business for 5 years?
@ With 3 vehicles in the fleet, do have to register my business for the actual expense method?
@ Let say driver quits after 6 months. Can I fill in the downtime to minimize the downtime? How would the tax situation be, if I'm a fleet owner and I pay for myself that way?
@ So many more questions, but I'm afraid you gonna be mad if I dont take it slowly.

Bests,

Goku.
 

UberTaxPro

Well-Known Member
Past Sponsor
Thank you so much.

@How should I use section 179 if I plan in business for 5 years?
@ With 3 vehicles in the fleet, do have to register my business for the actual expense method?
@ Let say driver quits after 6 months. Can I fill in the downtime to minimize the downtime? How would the tax situation be, if I'm a fleet owner and I pay for myself that way?
@ So many more questions, but I'm afraid you gonna be mad if I dont take it slowly.

Bests,

Goku.
@How should I use section 179 if I plan in business for 5 years? Depends on many factors...we should talk or you should talk to another accountant about the best road to travel.
@ With 3 vehicles in the fleet, do have to register my business for the actual expense method? No
@ Let say driver quits after 6 months. Can I fill in the downtime to minimize the downtime? How would the tax situation be, if I'm a fleet owner and I pay for myself that way? yes you can fill in anytime, you'll have 1099 income instead of rental income, not much difference other than you'll be working a lot harder.
@ So many more questions, but I'm afraid you gonna be mad if I dont take it slowly. HaHa! You might get mad at tax time if you suddenly realize you haven't been keeping your books correctly! Also, it doesn't take long to get set up correctly so it shouldn't slow you down much.
 

Stevie The magic Unicorn

Well-Known Member
My points...

Your warranty won't last a year.

3 year 36,000 mile warranty?

try 20 weeks

60,000 mile 3 year powertain warranty?

good luck getting 35 weeks or so.


And if you rent it out to someone who shares that car with their brother?


Your 3 year warranty could get blown in as little as 90 days.


Now let's assume your charging $500 a week to rent out that Suburban,

The high end uber fares are exceedingly rare, more than likely your driver is going to be trying to cover it on XL and X fares.

That $500 a week is $71.42 a day they have to cover.


Since rates constantly downslide that driver could easily end up spending 9-10 hours a day covering their rental and that gas hogs gas bill. (Let's assume $28.58 in gas per $100 earned) Then they would need another infinite hours to increase their pay to minimum wage. Sorry, but assuming they work 24 hours a day,

They might only make $240 with $70 to pay you, and $60-70 for gas, leaving them with all of $100 for 24 hours of work, or $4.50 an hour.



Your busines model is fundamentally flawed, there's simply no way to make enough driving uber to pay you what it costs to operate a vehicle and maintain it properly, and have the driver not sue you into oblivion.

Oh and if you lease out a vehicle to full time drivers,

It won't last 5 years.
 

LADryver

Active Member
@can I deduct the mileage that driver driven with the IRS? Yes if you elect to use the mileage method and operate less than 5 vehicles, no if you elect or have to use the actual expense method.
@Insurance? No with the mileage method, yes with actual expense method
@Oil change and maintenance? No with mileage method, yes with actual expense method
@ What software can I use to keep track of these expense and that I can properly file tax at the end of the year? Quickbooks, you'll need to pay attention to taxes a bit more than once a year. The help of an accountant might be a good idea to at least get you started out correctly.
Post automatically merged:


Yes, the way you set this up in the beginning is very important.
I am very sorry Ubertaxpro but you confused leasing with fleet. A fleet is owned and operated with related expenses but a lease is something else.

The expenses you face as a lessor include those that you spent to find the lessee, such as fees to a service that facilitates it, or advertising. Anything you actually do pay, like the insurance and maintenance. you can deduct on your Schedule C also. This includes registration, and everything that comes from your pocket. When you do drive the car you can take the Fed mileage rate. Because you are leasing you may qualify to use Schedule E instead.
 

UberTaxPro

Well-Known Member
Past Sponsor
I am very sorry Ubertaxpro but you confused leasing with fleet. A fleet is owned and operated with related expenses but a lease is something else.

The expenses you face as a lessor include those that you spent to find the lessee, such as fees to a service that facilitates it, or advertising. Anything you actually do pay, like the insurance and maintenance. you can deduct on your Schedule C also. This includes registration, and everything that comes from your pocket. When you do drive the car you can take the Fed mileage rate. Because you are leasing you may qualify to use Schedule E instead.
From the OP post "Let say I'm building a fleet and lease it out to fellow drivers that need cars to drive." (bold added by me). As long as the OP is using less than 5 cars I don't see a problem here. Could you point me to some code that states otherwise?
 

LADryver

Active Member
Yes but what you missed was the fleet is as a word being misused for the purpose. He indicated that each of the vehicles would on their own be rented out. This is happening in Southern California that I know of where companies are supporting this activity. It isn't code, it is the activity. He describes the business model of Fair, and the supported models of Getaround, Hyrecar, and others.
Post automatically merged:

I’m considering doing this too
My thought is that the driver can deduct the lease payments and you would declare the lease payments as income.

As to tax deductions... if you do all the maintenance and provide insurance and pay for gas I think you would get to deduct the standard milage deduction.but if you split expense, you each can deduct your actual expenses.

I’m no accountant so I will be consulting an accountant before I buy the first car

I will also consider leasing the cars to two drivers. A day shift and a night shift ie keep them running 24 hours a day
If you are "leasing" or renting out a vehicle that you own, there is little control over "shifts" like that, but you are describing a business model very similar to taxicab companies. You should research the operating of those, if this is what you want to do. Otherwise the renter or lessee is entitled to the vehicle both day and night for the duration of the contract, if it is to be like rentals we know. Anything else and you are breaking new ground.
Post automatically merged:

My points...

Your warranty won't last a year.

3 year 36,000 mile warranty?

try 20 weeks

60,000 mile 3 year powertain warranty?

good luck getting 35 weeks or so.


And if you rent it out to someone who shares that car with their brother?


Your 3 year warranty could get blown in as little as 90 days.


Now let's assume your charging $500 a week to rent out that Suburban,

The high end uber fares are exceedingly rare, more than likely your driver is going to be trying to cover it on XL and X fares.

That $500 a week is $71.42 a day they have to cover.


Since rates constantly downslide that driver could easily end up spending 9-10 hours a day covering their rental and that gas hogs gas bill. (Let's assume $28.58 in gas per $100 earned) Then they would need another infinite hours to increase their pay to minimum wage. Sorry, but assuming they work 24 hours a day,

They might only make $240 with $70 to pay you, and $60-70 for gas, leaving them with all of $100 for 24 hours of work, or $4.50 an hour.



Your busines model is fundamentally flawed, there's simply no way to make enough driving uber to pay you what it costs to operate a vehicle and maintain it properly, and have the driver not sue you into oblivion.

Oh and if you lease out a vehicle to full time drivers,

It won't last 5 years.
Some car makers, and I know factually that Nissan does, adjust an original warranty by upselling it in finance. You could purchase a much longer warranty. Then you could purchase a good third party service contract.
 
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Stevie The magic Unicorn

Well-Known Member
Yes but what you missed was the fleet is as a word being misused for the purpose. He indicated that each of the vehicles would on their own be rented out. This is happening in Southern California that I know of where companies are supporting this activity. It isn't code, it is the activity. He describes the business model of Fair, and the supported models of Getaround, Hyrecar, and others.
Post automatically merged:



If you are "leasing" or renting out a vehicle that you own, there is little control over "shifts" like that, but you are describing a business model very similar to taxicab companies. You should research the operating of those, if this is what you want to do. Otherwise the renter or lessee is entitled to the vehicle both day and night for the duration of the contract, if it is to be like rentals we know. Anything else and you are breaking new ground.
Post automatically merged:



Some car makers, and I know factually that Nissan does, adjust an original warranty by upselling it in finance. You could purchase a much longer warranty. Then you could purchase a good third party service contract.
They arn't going to sell you a 500,000 mile warranty

your on crack
 
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