The luxury car rules for depreciation essentially limits the amount that can be written off, it is not a brand or type necessarily.
Congress decided years ago that the taxpayers should not subsidize extravagant vehicles used by business. To prevent that, the law squeezes otherwise allowable depreciation deductions for “luxury cars.” But don’t think Rolls Royce or Ferrari. Congress has a much less extravagant view of luxury. For 2017, the maximum first-year depreciation write-off for a new (not used) car is $3,160 plus up to an additional $8,000 in bonus depreciation. For a used car, the maximum first-year write-off for 2017 is a much lower $3,160. (These figures assume 100% business use.)
The luxury car rules for depreciation essentially limits the amount that can be written off, it is not a brand or type necessarily.
Congress decided years ago that the taxpayers should not subsidize extravagant vehicles used by business. To prevent that, the law squeezes otherwise allowable depreciation deductions for “luxury cars.” But don’t think Rolls Royce or Ferrari. Congress has a much less extravagant view of luxury. For 2017, the maximum first-year depreciation write-off for a new (not used) car is $3,160 plus up to an additional $8,000 in bonus depreciation. For a used car, the maximum first-year write-off for 2017 is a much lower $3,160. (These figures assume 100% business use.)
As bizarre as it sounds, the 2017 rules treat cars over $16,000-ish as "luxury". Thankfully the new 2018 laws have corrected this to more reasonable numbers.
When I review my taxes, the program says that depreciation used overall is too high for my recent car sale (which was about 10.25 % of each of my rental property mileage compared to my personal use. How do I correct entry?
Your basis in a vehicle is the amount paid minus depreciation due to business use. If you used actual expenses, you can add the total depreciation taken each year. If you took the standard deduction, part of it was considered depreciation. Take your business miles and multiply it by the depreciation for each year used.
For 2020, it was 27 cents per mile driven.
For 2019, 26 cents per mile.
For 2017 and 2018, 25 cents per mile,
For 2016 it was 19 cents per mile.
You can google IRS mileage depreciation if you need more years.