Question

Computing depreciation for a vehicle used for passive income

Forum|Forum|2 years ago
October 20, 2023
2 replies
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How does a car that was used for personal use get depreciated in the following situation?

- A car was bought in 2010, put in service 2017 when rental property X was put in service.

- Its business usage fluctuates between 5-15%.

I do see the car listed under the "depreciation and amortization report" in 2017 alongside with the rental property, but the depreciation basis is 0 (unlike that of the rental property), why? The car has some value... Assuming that's correct, I do not have any more questions, although I would definitely want to understand why.

If that is incorrect and some value should have been put there, I have the following question:

- Another property Y is bought and put in service in 2019. What value should be used to start depreciating the car for property Y?

A

Anonymous_

Employee

We probably need more details with respect to how you entered the asset (whether a value was entered) into the 2017 program.

L

lameriAuthor

@Anonymous_ I'm not sure I understand. What kind of value? Like I said, I see the car listed in the Depreciation and Amortization Report, but the basis is 0.

Carl11_2

Employee

Its business usage fluctuates between 5-15%.

That means you are taking the "per-mile" deduction for each mile of business use.

I do see the car listed under the "depreciation and amortization report" in 2017 alongside with the rental property, but the depreciation basis is 0

Precisely what it should show on that specific form, since you are using the per-mile deduction.

With the per-mile deduction, you are claiming 58.5 cents per mile for each business bile driven between 1/1/2022 and 6/30/2022. Then it's 62.5 cents per mile for each business mile driven between 7/1/2022 and 12/31/2022.

Of that per-mile amount, a portion of it is depreciation. So a portion of your depreciation is included for each mile driven. Therefore, it will always show ZERO on the 4562 when claiming a per-mile deduction.

L

lameriAuthor

@Carl11_2 Yes, I am. In that case, it does not need to show as depreciated and that's why it's not there with a cost basis?

A

Anonymous_

Employee

@lameri If you've always used the standard mileage rate, then there will be nothing to depreciate (i.e., there will be a zero in the depreciable basis column or it will be blank).