Just trying to find a straight forward answer as im struggling to find information that fits my scenario exactly.
I am considering selling my work vehicle but after speaking with my accountant he let me know about how i would be required to pay tax on the sale price.
To give some information, i purchased my own vehicle 5-6 years ago, work then has paid me a car allowance to use my personal vehicle for my day to day job. In the last 5-6 years i have claimed depreciation on this vehicle as a tax deduction as well as fuel, servicing etc. I have claimed around 90% business use as i realistically dont use this vehicle outside of work hours.
I am wanting to now upgrade my car but the private market for my current vehicle means that i would easily be able to sell it for close to $40k. It has been depreciated down to close to $9k. According to what my accountant has said, if i was to sell this i would technically be profiting $31K and then be required to pay tax on this profit which would be close to $10k in tax, making the idea of selling it very unappealing. My confusion is that no one at my company who has sold or traded in their vehicles has come across this issue or has a solution for me.
A few questions i have is;
- Is this information correct? Does this apply to me because its a personal car not a business asset?
- How long does this last for? If i own the car for 15 years and its deducted down into the hundreds of dollars then sell it for 20k am i still in the same boat?
- How does this work for trading the vehicle in? is it any different?
I appreciate any clarity and help i can get.
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