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February 24, 2024
Question

I purchased a car to use 100% in Turo (renting out), can I deduct it as an asset in Section 179 or should I deduct it over 5 years?

  • February 24, 2024
  • 1 reply
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1 reply

AmyC
February 26, 2024

Your choice based on what you know and expect. Consider these things:

 

  • If you take a sec 179 and / or bonus depreciation, then sell /convert the vehicle sooner than expected, you could end up paying tax on the recapture of amounts written off. The easiest thing to do is simple depreciation.
  • Sec 179 limits the amount allowed on vehicles. If you will be making more money in the future, it is nice to have the depreciation to offset the income. There is also bonus depreciation available on a vehicle.
  • Items  first placed in service are usually depreciated or you have the option to  take a sec 179. You can take both. but it gets more tricky. The sec 179 limit is applied first. Then any allowable bonus depreciation can be claimed.  Page 5, line 14 for form 4562 states:
  • For qualified property (defined below) placed in service during the tax year, you may be able to take an additional special depreciation allowance. The special depreciation allowance applies only for the first year the property is placed in service. The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS.

 

For more about sec 179, see Pub 946

For more about bonus depreciation, see Form 4562 instructions

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