The length of deduction for purchasing cost of a new vehicle

[nbtongil]

Hi,

I thought I would be asked for how many years I like to include in terms of deducting a new vehicle purchase cost.  I think I was asked this question when I purchased a used car two years ago and I just marked one year for deducting the purchase cost, but I am not asked this question this year (2024- tax year of 2023) when I included a new vehicle in the vehicle expense with the standard mileage option.  Because this year it is a new car, I wanted to deduct the purchase cost (not the maintenance expense) over five years.    Please let me know what I did wrong.  

[ThomasM125]

You didn't do anything wrong. When you use the standard mileage deduction option, you can take a business standard mileage deduction for your vehicle for any year you use the vehicle in your business. When you choose that option, a depreciation factor is included in the standard mileage deduction rate for every year you use the vehicle in the business.

If you were to deduct the actual expenses, you would depreciate the vehicle for seven years, or you may be able to elect bonus or section 179 depreciation that would allow you to deduct the cost or a portion of the cost of the vehicle in the year you put it into service. This option is typically just available for heavy vehicles, over 6000 pounds of gross vehicle weight however.

[nbtongil]

Thank you for the prompt reply.   Yet, I do remember that I was asked 'how many years' I wanted to include for a new vehicle purchase cost deduction, and I reported just 'one year' like a couple of years ago for a used car I purchased that year.   Am I just simply confused because we do this once a year?   Is there no such thing as new vehicle purchase cost deduction? 

[AmyC]

No, you can't buy a car and write it off on your taxes as a one time write off. When you purchase a vehicle, you can depreciate it on your tax return. Depending on the type, percent business use and cost, how you depreciate it will vary. When you do this, you have to claim actual expenses and keep track of all related things for your deductions. 

If you are using the standard mileage deduction, there is no separate write off for the car. This method is recommended if you plan to keep the car a long time.

In Topic no. 510, Business use of car states:

Depreciation

Generally, the Modified Accelerated Cost Recovery System (MACRS) is the only depreciation method that can be used by car owners to depreciate any car placed in service after 1986. However, if you used the standard mileage rate in the year you place the car in service and change to the actual expense method in a later year and before your car is fully depreciated, you must use straight-line depreciation over the estimated remaining useful life of the car. There are limits on how much depreciation you can deduct. For additional information on the depreciation limits, please refer to Topic no. 704. Publication 463 explains the depreciation limits and discusses special rules applicable to leased cars.

Please see page 34 of Publication 463 regarding business use to start your journey. Then you can look at price factors and the rest. Luxury automobiles are limited on the bonus depreciation that can be claimed.