@Tanoposc wrote:
But what if you used standard mileage but you didn't consider it a business vehicle? For example, I always use my vehicle less than 50% of the time for business. My car insurance company does not consider that it's a business vehicle in that instance.
Does that mean you still have to do the recapture upon sale?
Then the next question is, is it even worth taking the business mileage if you're going to take a hit when you sell it?
Thank you.
If you claimed mileage, that is business use for tax purposes, no matter who else is asking.
The standard mileage rate include depreciation. You must recapture it when you sell.
However, there may be nothing to recapture, especially with less than 50% use. Suppose the car cost $20,000. You claimed 5000 miles of business use over the years, that's about $1250 of depreciation. (You need to determine the exact amount based on the mileage and depreciation value for each year that mileage was claimed.) The depreciation reduces your cost basis from $20,000 to $18,750. If you sell for less than your adjusted basis, there is no gain to report and nothing to recapture.
Recapture only applies if you sell the car for more than the adjusted basis (your cost reduced by the depreciation).
And since the mileage rate also includes an allowance for fuel and maintenance, you should definitely take the mileage deduction if allowed, since only the depreciation portion needs to be recaptured.
