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Does anyone know (for sure know, not guess!) how deducting a used vehicle used 100% for business is? I thought you could depreciate the amount in the first year of use, not over 5 years.
Does it matter the vehicle was purchased used, and not new? In 2012 we purchased a new Transit, and got a $10K deduction (all depreciation in first year).
Last year we purchased 2 Transits, but they were certified Pre Owned, so not new.
Anyone able to help explain this, in terms I can understand? :-)
Turbo Tax:
Depreciation:
This is the amount you can deduct over time for general wear and tear of the vehicle. The standard mileage rate includes an amount for depreciation and reduces the adjusted basis of the vehicle when you decide to sell or otherwise dispose of it. In the example above, it works out this way:
2016 Standard Mileage Deduction: 16,202 miles x 54 cents per mile = $8,749.
Equivalent Vehicle Depreciation included: 16,202 miles x 23 cents per mile = $3,726
If you use the "actual" expenses method and the vehicle was acquired new in 2016, the maximum first-year depreciation deduction for 2016 is:
Type of Vehicle Deduction
Auto $3,160
Light truck, van, or SUV built on a truck chassis $3,560
In the example above, your depreciation on a new (not used) auto would be limited to the business-use percentage of 90% times the maximum 2016 first-year allowance of $3,160, or $2,844.
Since depreciation accumulates, each year's business mileage affects the adjusted basis of the vehicle. The adjusted basis will, in turn, be used to determine the gain or loss when the vehicle is sold, so keeping good records is essential.
Does it matter the vehicle was purchased used, and not new? In 2012 we purchased a new Transit, and got a $10K deduction (all depreciation in first year).
Last year we purchased 2 Transits, but they were certified Pre Owned, so not new.
Anyone able to help explain this, in terms I can understand? :-)
Turbo Tax:
Depreciation:
This is the amount you can deduct over time for general wear and tear of the vehicle. The standard mileage rate includes an amount for depreciation and reduces the adjusted basis of the vehicle when you decide to sell or otherwise dispose of it. In the example above, it works out this way:
2016 Standard Mileage Deduction: 16,202 miles x 54 cents per mile = $8,749.
Equivalent Vehicle Depreciation included: 16,202 miles x 23 cents per mile = $3,726
If you use the "actual" expenses method and the vehicle was acquired new in 2016, the maximum first-year depreciation deduction for 2016 is:
Type of Vehicle Deduction
Auto $3,160
Light truck, van, or SUV built on a truck chassis $3,560
In the example above, your depreciation on a new (not used) auto would be limited to the business-use percentage of 90% times the maximum 2016 first-year allowance of $3,160, or $2,844.
Since depreciation accumulates, each year's business mileage affects the adjusted basis of the vehicle. The adjusted basis will, in turn, be used to determine the gain or loss when the vehicle is sold, so keeping good records is essential.
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