Vehicle Depreciation Recapture

Launchpad McQuack

Well-Known Member
I have seen it mentioned in passing a couple times that if you claim the standard mileage-rate deduction then a portion of the per-mile deduction rate is allocated to depreciation. If you later sell the vehicle, you then have to recapture the depreciation that you claimed. How does that work? I want to make sure that I am keeping the records now that I will need to handle that situation when it eventually comes.
 

Trafficat

Well-Known Member
I remember a discussion on this before. My car is about to be aged out, so I looked into this. The vehicle is considered to depreciate but it never can have a negative value. If you buy a car for $10,000, and it depreciates to $5000 based on the $0.27/mi depreciation (mileage depreciation changes each year but $0.27 is for 2020), and you sell it for $7000, you pay taxes on a $2000 profit. If you buy a car for $10,000, you claim the standard mileage deduction on 50,000 miles, the car is deemed to have $0 value, not a negative value (.27*50000=$13500, so value would be -$3500 if it could go negative.). So if you sell it for $7000, you pay taxes on making a $7000 profit, not on a $10500 profit.
 

Launchpad McQuack

Well-Known Member
If you buy a car for $10,000, you claim the standard mileage deduction on 50,000 miles, the car is deemed to have $0 value, not a negative value (.27*50000=$13500, so value would be -$3500 if it could go negative.). So if you sell it for $7000, you pay taxes on making a $7000 profit, not on a $10500 profit.
If you fully depreciate the vehicle, can you still take the full standard mileage-rate deduction for miles driven after the vehicle is fully depreciated, or do you have to reduce the standard mileage rate by the portion of the mileage rate that is allocated to depreciation since the vehicle no longer has any depreciable value?
 

Trafficat

Well-Known Member
You can use the standard mileage deduction without adjustment even after it is fully depreciated.
 
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