- As a rule, repair expenses for your personal vehicles are not tax deductible. However, if you use your vehicle in your job, you may be able to deduct portions of repairs. Examples of this type of use would be running business errands with your vehicle or making sales calls -- and only if your employer doesn't reimburse you for the use. You are only able to deduct the repair expenses proportionate to the business use of the vehicle, using the actual expense method. You cannot take a deduction per mile of use and claim the repairs as another expense.
- If you use a vehicle in your own business, repairs are a business expense and are deductible on your income taxes. You would need to use the actual expense method for calculating your deductible vehicle expense for the repair to count. Examples of deductible business vehicle repairs would be oil changes and other routine maintenance and tire replacement. If you use the vehicle at any time for personal reasons, you can only deduct the business portion of your maintenance expenses. If you use your vehicle 90 percent of the time for your business, you could deduct 90 percent of the repair cost.
- According to Internal Revenue Service guidelines, refurbishing or restoring a vehicle is a capital cost. Capital expenditures must generally be depreciated over several years. Examples of refurbishment expenses would be major body work and repainting or installing equipment to allow the vehicle to be used for a different purpose. Major repairs such as engine or transmission replacements are a gray area, but if the repair significantly extends the useful life of the vehicle, it is probably considered a capital cost.
- If you are in the business of selling cars, you may refurbish vehicles that you take as trade-ins or vehicles that you purchase to sell. Such repairs are deducted under the cost of goods sold section on your taxes when you calculate gross profit and not as a separate expense.
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