Vehicle depreciation/recapture

Forum|Forum|7 years ago
April 14, 2019
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I'm a self employed Realtor. In 2018, I sold a vehicle,and changed a vehicle from partial business use to 100% personal use. I never took depreciation on either vehicles. Now I am at the Business Income and Expenses, Any Other Property Sales? section. Is there recapture if I never took a depreciation credit? Need to know what to check. Thank you!

Carl11_2

Employee

I assume you took the "per-mile" deduction on the old vehicle, since that's what you have to do for a vehicle that is less than 100% business use. If so, then you only deducted the business miles of course. For each mile, a portion of that per-mile deduction is in fact, depreciation. As you know, the per-mile deduction changes each year. So likewise does the amount of that per-mile deduction that is depreciation.

The webpage at https://www.irs.gov/tax-professionals/standard-mileage-rates has the per-mile deduction for all tax years back to 1997. Now to get the amount of each mile that is depreciation, you have to click on the "source" link for the tax year you need.

As an example, in the source link for tax year 2018 there is a link to Notice 2018-03. In that notice you'll see the amount of each 58 cents per-mile business deduction that is depreciation, is 25 cents. So if you have 1000 business miles in 2018, that was a $580 deductible business vehicle expense that was claimed in the Business Vehicle Use section. Of that $580, $250 of it was depreciation.
You'll have to get your total depreciation taken by going through each year in which the vehicle was used for the business.