Did you know that equipment, vehicles and even buildings will be depreciated in value as time passes? The idea behind depreciation is that any asset that you purchase is only useful for a period of time and then it must be replaced. When it comes to tax time, you may deduct a portion of the cost of the asset (depending on what it is), which is known as the depreciation expense.
A used forklift for sale is considered a depreciable asset because it is often classified as being a type of vehicle or a piece of equipment. When it comes to determining its depreciation schedule, however, you will find that a forklift falls into a category known as 'other property used for transportation'. This gives you five years to depreciate the cost of the equipment on your taxes.
What this means is that a forklift is considered to last you for five years before it will need to be replaced. During that time, you are able to depreciate some of this value on your taxes, meaning that you won’t have to pay as much. Once this five year period has ended, you will no longer be able to depreciate the value of the vehicle and will have to cop the costs on the chin.
When it comes to selling a depreciated forklift, however, it is important to keep in mind that you will be taxed on the gains of the sale. You will be allowed a basis (which is what you paid for the asset) to offset the sale. You will need to minus the purchase price from the sale price then add the depreciation that you have taken for a final amount.
Before you decide to depreciate used forklifts for sale, however, it is important that you consider all of the costs involved with selling the vehicle at a later date, as you may find that the sale costs you more in taxes than what depreciation allows you to save. Your accountant should be able to walk you through all of these steps and to answer any questions you may have.