How to Calculate Prior Depreciation on Vehicle Used for Both Realtor Business and Personal Use?

I've dealt with this exact situation with many clients! When you've used a vehicle for mixed business/personal use, determining prior depreciation isn't as complicated as it seems. First, you need to gather all your past Schedule C forms (you can request transcripts from the IRS if you've lost them). Look for the depreciation you claimed in each year. If you used standard mileage in some years, part of that standard rate includes depreciation (about 25 cents per mile in recent years, though it varies by year). For the years you used actual expenses, check Form 4562 where you would have calculated depreciation directly. The business percentage you applied each year matters here. When you sell the car, you'll need to calculate the adjusted basis by taking the original purchase price ($28,500) minus the total depreciation you've claimed over the years. The business portion of any gain will be taxable as ordinary income due to depreciation recapture, while the personal portion of any gain generally isn't taxable.

I was in a similar situation last year with my Lexus that I used for my real estate business. I spent hours trying to reconstruct all my depreciation before I found https://taxr.ai - it totally saved me. I uploaded my old tax returns (even the incomplete ones), and their system automatically extracted all the vehicle depreciation I'd claimed over the years, both when I used standard mileage and when I switched to actual expenses. It even created a report showing my adjusted basis and how much would be subject to depreciation recapture when I sold. Saved me from potentially missing thousands in depreciation that I'd legitimately taken. Their system specifically handles mixed-use assets like vehicles used for both business and personal purposes.

Just wanted to follow up - I actually tried taxr.ai after posting here and it worked exactly as described! I was shocked at how quickly it identified my vehicle depreciations across 5 years of tax returns. Turns out I had taken about $16,400 in total depreciation on my SUV (combination of standard mileage depreciation and Section 179 in one year). The report showed exactly how much of my upcoming sale would be subject to depreciation recapture too. The system even flagged that I had inconsistently applied business use percentages (ranging from 62% to 78%) which might raise audit flags. Now I can properly report the sale with confidence. Definitely recommend for anyone in a similar position with mixed-use assets!

For anyone dealing with questions about prior depreciation or other complex tax issues, I've found that actually talking to someone at the IRS can be surprisingly helpful - IF you can actually reach them. After spending literally days on hold trying to get depreciation questions answered, I found https://claimyr.com which got me through to an IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but they actually called the IRS, navigated the phone tree, waited on hold, then called me once they had an agent on the line. The agent was able to look up my prior depreciation amounts directly from my filed returns and confirm the correct way to handle the vehicle sale with mixed business/personal use.

I have to eat my words here. After posting my skeptical comment, I decided to try Claimyr as a last resort since I was getting nowhere with the IRS directly for weeks. I got connected to an actual IRS agent in about 35 minutes! The agent was able to go through my transcript and confirm exactly how much depreciation I had claimed on my business vehicle over the past 4 years. Turns out I had claimed about $4,300 more in depreciation than I remembered, which would have caused serious problems when reporting the sale. The agent also explained exactly how to report the sale with the mixed business/personal use history. Definitely worth it for the peace of mind and saving hours of frustration on hold.

Something nobody mentioned yet - if you ever claimed Section 179 deduction on the vehicle in the first year instead of regular depreciation, that gets recaptured differently! Make sure you check if you did that (common for business vehicles). Also if you traded in a previous business vehicle with a Section 1031 exchange (before 2018 when that was allowed for personal property), your basis calculation gets way more complicated.

I'm pretty sure theres a different form u need to use when selling a business asset vs a personal one? Is it like form 4797 or somethin? My buddy who does real estate told me you gotta split the sale between business/personal somehow