Skip to main content
Employee
March 16, 2023
Question

Deductible car expenses

  • March 16, 2023
  • 1 reply
  • 0 views

On schedule C for a new car bought in 2022, if I use the standard mileage deduction for 2022 and going forward, is there any other depreciation method I can also use besides section 179? If there is another depreciation method to use, would the depreciation be recovered when I sell the car in the future?

1 reply

March 16, 2023

On schedule C for a new car bought in 2022, if I use the standard mileage deduction for 2022 and going forward, is there any other depreciation method I can also use besides section 179? You cannot combine depreciation and standard mileage deductions in any year.  

 

If there is another depreciation method to use, would the depreciation be recovered when I sell the car in the future?

If you use the standard mileage deduction, and chose to switch to actual expenses, you would only be allowed to use the straight line method of depreciation. 

 

The depreciation would not be recovered in the future if you are using the straight line method of depreciation or the standard mileage deduction.  

 

Depreciation recapture only occurs for your vehicle when you have excess depreciation.  This happens when you use the Modified Accelerated Depreciation or section 179. 

 

Ex.  If you bought a SUV for $27,000.  You took a section 179 and expensed it fully in year one.  You decide to sell it in year 3 on 1/1 owning it for exactly 2 years (for ease of math).  If you would have used the straight line method of depreciation, you would have taken a deduction of $5,400 each year for a total of $10,800 for the 2 years.  However, since you took the entire $27,000 in the first year, you would have to recapture $16,200 (27,000-10,800) as the excess depreciation.  However, if you didn't sell it until year 6, you would not need to recapture any of the depreciation as the vehicle would have passed its useful life. 

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"
March 16, 2023

@Vanessa A wrote:

 

The depreciation would not be recovered in the future if you are using the straight line method of depreciation or the standard mileage deduction.  

 

Depreciation recapture only occurs for your vehicle when you have excess depreciation.  This happens when you use the Modified Accelerated Depreciation or section 179. 

 

 However, if you didn't sell it until year 6, you would not need to recapture any of the depreciation as the vehicle would have passed its useful life. 


 

There are several types of "recapture".  I think you are only focusing on the "recapture" for Listed Vehicles an "recapture" of Section 179, while ignoring the 'regular' recapture for all Section 1245 property.