Hi, I use my car for business purpose (I'm a part time real estate agent) and also for my personal rental properties. How to enter vehicle expenses on Schedule C and E?

Forum|Forum|1 year ago
March 4, 2025
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For example, I use 200 miles for business, and 300 miles for rental, and 500 miles for personal purposes. It seems that if I put vehicle expenses on both places - (20% usage for business and 30% on rental keep all other costs such as registration, car repair, etc the same), Turbotax treated my car as two separate cars... The depreciation seems not correct in this case (I prefer using actual expense since this will give me a bigger return).

PatriciaV

Employee

Yes, you can report the vehicle for both activities and split actual expenses between the two businesses. However, you should enter the vehicle only once for depreciation.

Your other option is to report all the auto expenses on one business (ex: Schedule C). Then add a miscellaneous expense for "auto expenses transferred to Schedule E" with a negative amount. On the Schedule E business, add a miscellaneous expense for "auto expenses transferred from Schedule C" with a positive amount.

Keep good records to prove how the vehicle was shared between the two activities.

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AmeliesUncle

@PatriciaV wrote:
However, you should enter the vehicle only once for depreciation.

You can't do that unless you are also allocating some to the other activity. You can't include the full expense on on Schedule because it would alter the profit of that activity and alter SE tax.

JessicaguoAuthor

My understanding is that for one car, I can only enter the depreciation in one place (Schedule E or C). Otherwise, the tax forms treated there are one car used for Schedule E, one car used for schedule C.. which the depreciation will not make sense anymore.

Not sure if my understanding is correct? Could you please share your thoughts on the best practice to allocate the car expense on schedule E and schedule C? I think my scenario is not uncommon. But I'm not able to find a good solution online. Thank you.

AmeliesUncle

@Jessicaguo wrote:
For example, I use 200 miles for business, and 300 miles for rental, and 500 miles for personal purposes. It seems that if I put vehicle expenses on both places - (20% usage for business and 30% on rental keep all other costs such as registration, car repair, etc the same), Turbotax treated my car as two separate cars... The depreciation seems not correct in this case (I prefer using actual expense since this will give me a bigger return).

Yes, the program would be treated as two separate vehicles.

The depreciation should be perfectly fine. Sort of/maybe. If the total business/rental usage is over 50%, you have the option to use "accelerated" depreciation, but having it split won't allow you to do that. Was the vehicle used before 2024, and if so, was it using "accelerated" depreciation (Bonus depreciation, 200%DB, or Section 179)? If the total business/rental percentage was 50% or less (including in prior years), that doesn't apply and splitting it is fine.