Vehicle Depreciation

[barbgreenx]

When a Vehicle is fully depreciated and the client still uses it for business

can the standard mileage now be used. Thanking you in advance.

Barbara Green

[Just-Lisa-Now-]

Once youve used actual you dont get to switch to mileage once your depreciation is used up, youre still stuck with actual expenses.

[TaxGuyBill]

Actually, you CAN go back to the Standard Mileage Rate ... IF it was used in the first year.

[Just-Lisa-Now-]

so you can use mileage one year, then actual and depreciate until the dep runs out, then go back to mileage? doesnt mileage include depreciation? but the depreciation would be all used up.

[TaxGuyBill]

Yep.  That is one of the great things about the Standard Mileage Rate ... you can keep using depreciation (built in) even when the Basis is zero.   It is especially nice for high-mileage businesses.

[Just-Lisa-Now-]

so if you sell it do you have to recapture the depreciation taken as actual expense as well as the dep built into the mileage rate?

[TaxGuyBill]

Yes, any gain due to the depreciation would be recaptured.

But again, you can keep claiming the Standard Mileage Rate even when the Basis of the vehicle is zero.  So that is effectively 'free' depreciation.