DianneW777, Thanks for your reply.
Can you just clarify some of the terminology you just used in your response, please?
When you say "Gain is taxable at your regular rate of tax up to the amount of depreciation claimed or the actual gain on the transaction." - that confuses me.
I had $1393 depreciation, so, are you saying that all of any gain amount, that is under $1393, is taxable?
Also, when you say gain is taxable on any actual gain - by actual gain do you mean the $100 (25% of the $400 sales price)? Because, I could see calling the $400 the actual gain also! But, I think you mean the actual gain that is derived by multiplying business 25% usage of the sales price of $400 = $100?
You also said "In the end you only pay tax on the gain you actually received on the sale of your vehicle used in your rental. Your calculations look correct based on the business use percentage." Why is their a 'gain' under tax rules? I mean I purchased the car for $2500, and sold it for $400. Why is their any gain? I assume it is related to depreciation, but I am having trouble wrapping my head around it. Thanks!
