Employer Truck Allowance/Mortgage Question

[175gr7.62]

My allowance isn’t taxed, if it was definitely not worth it.

Sounds like you have “good” CPA. Talked to mine today about my boys situation and he reiterated what someone said above that a straight truck allowance is taxable income….part of the Trump 2017 Tax bill or something.

His mortgage guy also confirmed it will impact his DTI. Thinking I may buy his truck and then he can buy it from me after they close on a house.


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[skinsfan]

I’m my opinion if he is concerned a truck will screw up his debt to income he is trying to buy too much of a house. Just my .02.

[Atfulldraw]

I’m my opinion if he is concerned a truck will screw up his debt to income he is trying to buy too much of a house. Just my .02.

And shouldn’t be buying a new truck that he can’t pay cash for….

You can lose the job and still owe for the truck.

[captainsling]

Unless he has a lot of other debt I would not worry about having a truck payment. 90% of everyone out there has a truck or car note. If he can’t qualify without having a car note or 2, maybe a house is not a wise purchase at this time. Now it may be different if he is worried about credit score. That will be impacted.

[Mike D]

Employer Truck Allowance/Mortgage Question

Not a bad deal if he finds a nice truck under $700 payment

It rarely is as good as it sounds for the employee but is great for the company.

$700 payment only buys a low $30k vehicle if you finance taxes and fees.

Depending on the amount of insurance coverage required add another $100.

That only leaves $200 a months for gas. I’m assuming that he will be driving a lot so in a truck $200 in gas won’t get you far.

Plus you just signed up to go into debt. No thanks.


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[bboswell]

It rarely is as good as it sounds for the employee but is great for the company.

$700 payment only buys a low $30k vehicle if you finance taxes and fees.

Depending on the amount of insurance coverage required add another $100.

That only leaves $200 a months for gas. I’m assuming that he will be driving a lot so in a truck $200 in gas won’t get you far.

Plus you just signed up to go into debt. No thanks.


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You spell it out well but he will be reimbursed for tires and repairs.

I still don’t see it as a good deal though

[philcam]

I like to buy US made when possible, but it also depends on the product.

Some Made in USA is just absolute junk. On has to look no further than RVs. What a race to the bottom to produce the crappiest product and charge the most.

[jgard2522]

Negative ghost rider. Mine is dam sure taxed every month!!!

My allowance is non tax as well.



ADDED** Mine is technically a mileage reimbursement not allowance

[cantexduck]

He will not be paid mileage. Reimbursed for fuel , tires and maintenance. So he won’t be able to write off miles if I understand it correctly. Doesn’t sound like a great gig to me. Depending on his type of work you can work over a truck in 3 years pretty good and it’s value is next to nothing. I have a company issued truck and I love it that way , everything is covered with my fleet card or company credit card. We drive in some pretty rough places though , rock quarries.

I also have a personal truck that is used 100% for a business I own .

[SelfGuided]

#1 - You have to show 2yrs allowance to offset a payment, i.e. the payment will increase his debt ratio : https://selling-guide.fanniemae.com/...-as-income.htm

#2 - Taxability, CPA, etc. are useless when it comes to mortgage guidelines.

#3 - A 33% DTI is well within the vast majority of loan guidelines (some at 43%, some go to 50%, and FHA will often allow 56.99%).

The simple approach, have him ask his loan officer if $1,000 added to his debt if he still qualifies. It should take them less than 5 minutes to determine.

[SB09]

Negative ghost rider. Mine is dam sure taxed every month!!!

Same for me. Mine is taxed the exact same as my regular income.

[SHSU18]

My allowance covers my note with a little extra for insurance which I will have regardless of the job or not obviously. I also have a fuel card which is great during hunting season. Overall I view it as a win win.

[manwitaplan]

Negative ghost rider. Mine is dam sure taxed every month!!!

It depends how they do the allowance. If rolled into your check then yes. If paid separate then no.

Also I was fortunate to have a great accountant at a younger age when provided a company car allowance. Here is what you can do or should do. You take your total mileage for the year X the government rate and get that number. You can deduct your allowance and probably a percentage for personal use then write off the rest. 1000.00 a month may not go very far with note, insurance, gas, and maintenance.

The mileage IQ app is a good one for record keeping.


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[Hockley]

As others have said it is taxable. I get $1,000/month and I do NOT get reimbursed for maintenance or gas so he has a much better deal. We have a "policy" of what the truck must meet, but I assure you mine does not fall within the policy.

Ignore the Ramsey followers, a truck you use for business is NOT a bad investment. Plus it could be sold the day he doesn't need it with the way used vehicle prices are right now. Just don't go off buying a new King Ranch or something like that...

[Throwin Darts]

Thanks Randy.

My concern, for the sake of round numbers, is that say his debt is 2000 and his income is 8000, that gives him a DTI of 25%. Adding $1000 to both the numerator and denominator of that equation moves the DTI to 33%, so it isn't truly a wash as far as the banker man is concerned.

Shouldn't he also be making more money with the promotion vs not taking it?

IMO if you pass on a promotion to buy a house you're doing it backwards.