Old car now used for business

Forum|Forum|3 years ago
January 30, 2023
3 replies
22 views

Hi,

My 2001 Honda bought in the year 2006 I used for 100% personal use until the End of Year 2021. For the year 2022, I started a new business and used the same care 80% of the time/distance. The value of the car was ~$2500 per KBB.

1. Can I depreciate the car in the year 2022? Please note that I had the car for personal use for ~14 years prior to moving it for using for business. With economy going as it has, made no sense to buy a car for business until it takes off.

2. If yes, what value / method should I use to estimate for depreciation?

Thanks

JulieS

Level 15

Yes, you can claim depreciation on a vehicle with previous personal use, but the vehicle is not eligible for a Section 179 deduction.

If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion.

Click here to learn more.

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hameshatumkochahaAuthor

Level 4

Thanks for informing that the depreciation is allowed. The link you sent supported that too. Thanks!

I did not understand what you meant by not allowed under 179 deduction. Is that separate? What part of the information/status disqualifies the car from that 179 deduction? Just curious so I learn this thing...