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Automobile and Truck Depreciation Rules for 2013

Jun 26, 2013

Special depreciation rules apply for automobiles and trucks that are different from depreciation rules applicable to other fixed assets.  Generally, automobile and truck depreciation is dependent on whether the vehicle is considered a luxury auto, light van, light SUV, light truck, heavy SUV or heavy vehicle (excluding SUVs). Each vehicle category is defined below.

Luxury autos

  • If a vehicle’s unloaded gross vehicle weight is 6,000 pounds or less and it is not considered a truck or SUV (i.e., a car), then it is subject to luxury automobile depreciation limits.
  • For luxury autos was placed in service in 2013, the depreciation is limited to the following amounts:
    • 1st year in service (2013) – $3,160
    • 2nd year in service (2014) – $5,100
    • 3rd year in service (2015) – $3,050
    • 4th year in service and after (2016 and on) – $1,875.

Light vans, SUVs, and trucks

  • If a vehicle’s unloaded gross vehicle weight is 6,000 pounds or less and it is considered a light van, SUV or truck, then it is subject to luxury automobile depreciation limits for light vans, SUVs and trucks.
  • If the light van, SUV or truck was placed in service in 2013, then depreciation is limited to the following amounts:
    • 1st year in service (2013) – $3,360
    • 2nd year in service (2014) – $5,400
    • 3rd year in service (2015) – $3,250
    • 4th year in service and after (2016 and on) – $1,975.
  • The luxury automobile limits for light vans, SUVs, and trucks do not apply to a truck or van that is a qualified non-personal use vehicle.  The term qualified non-personal use vehicle means any vehicle, which, by reason of its nature, is not likely to be used more than a de minimis amount for personal purposes.  Examples of these trucks or vans include, but are not limited to, the following:
    • Bucket trucks,
    • Cement mixers,
    • Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat,
    • Dump trucks, and
    • Refrigerated trucks.

Heavy vehicles (excluding SUVs)

  • If a vehicle’s unloaded gross vehicle weight is more than 6,000 pounds (excluding SUVs and trucks with beds less than 6 feet in length), no luxury automobile depreciation limits are placed on that vehicle.
  • Bonus depreciation may be taken for 50% of the vehicle’s purchase price, if the vehicle is purchased new.
  • A Section 179 deduction may be taken for the remaining 50% of the heavy vehicle’s purchase price (subject to certain Section 179 limitations).

Heavy SUVs

  • If an SUV’s (or truck with a bed less than six feet in length) gross vehicle weight is more than 6,000 pounds, no luxury automobile depreciation limits are placed on that vehicle, but the Section 179 deduction that may be taken is limited.
  • A Section 179 deduction may be taken for up to $25,000 of the purchase price (subject to certain Section 179 limitations).
  • Bonus depreciation may also be taken for 50% of the vehicle’s remaining basis (after reducing the basis for any Section 179 deduction taken), if the vehicle is purchased new.
  • In addition, normal MACRS depreciation may be taken on the basis remaining after application of the bonus depreciation and Section 179 deductions.

Bonus depreciation impact

  • For 2013, an extra bonus depreciation deduction of up to $8,000 may be taken for luxury automobiles and light trucks, light vans or light SUVs purchased new in 2013. 
  • This deduction is in addition to the allowable normal luxury automobile depreciation limits.

Please contact the professionals at Gilliam Coble & Moser, L.L.P. with any questions regarding the application of the above rules to your business vehicles.