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Depreciation

  1. Amortization
  2. Bonus Depreciation
  3. Listed Property
  4. Section 1245
  5. Depletion
  6. MACRS

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Listed Property: Definition, Overview & How It Affects Business Taxes

Updated: February 23, 2023

Many business owners will have assets that they use for both personal and business use. These assets can often fall under the classification of listed property.

What exactly is listed property? And what are the rules surrounding it? Read on as we take a closer look.

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    KEY TAKEAWAYS

    • Listed property is any depreciable asset that is subject to a unique set of tax rules. This is if it is used mainly for business purposes.
    • To be classified as listed property, the asset in question must be used for no less than 50% of business purposes.
    • For the remainder of the time, the asset may be used for personal use.
    • Examples of listed property include computers, vehicles, and video recording equipment.

    What Is Listed Property?

    Listed property is a term that refers to a specific type of depreciable property. This type of property tends to be used primarily for business purposes, but is also used for personal use. In order to be considered listed property, an item must be used for business purposes more than 50% of the time. That means the assets can be used for personal purposes for the remainder of the time. Listed property is subject to a unique form of tax rules for the taxpayer.

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    Listed Property Rules

    The listed property rules were added to the U.S. tax code in order to keep people from claiming tax deductions on the personal use of property, whilst saying that the property was used for trade or business purposes. This allowed businesses to take various depreciation deductions and still be able to use the assets for non-business purposes.

    Businesses must keep a detailed record of all the assets they use as listed property. This would include the amount that they paid for each piece of property including the original cost, insurance, any repairs, and any other related expenses.

    How Is Listed Property Depreciated?

    The first step is to determine the percentages of business and non-business use. Based on those percentages, you will know if you qualify for bonus depreciation (up to 100% for certain vehicles for 2021), the Section 179 depreciation, or the regular MACRS depreciation method. For example, if your listed property is used for less than 50% for business purposes, then Section 179 is disallowed. 

    In order to determine the percentages, you will need to keep mileage logs for your vehicles or usage logs for any other assets of listed property. You will also have to keep adequate records or other supporting evidence to be able to take depreciation.

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    Examples of Listed Property

    According to the Internal Revenue Service (IRS), things that are classified as listed property include:

    • Passenger automobiles like cars and trucks under 6,000 lbs
    • Other property used for transportation (vehicles over 6,000 lbs like big trucks or airplanes) unless the vehicles are excepted like police cars or hearses 
    • Property generally used for entertainment, recreation or amusement such as computers, video cameras or other recording equipment.

    Summary

    Listed property is depreciable property that can be used for business and personal purposes and still be eligible for depreciation. It is a useful asset for small businesses as they can split the tax cost of personal and business expenses.

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    Sandra Habinger headshot

    Written by Sandra Habiger

    Sandra Habiger is a Certified Public Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Learn more about her work at http://www.sixfiguresaccounting.com/ .

    Sandra Habinger headshot

    Written by Sandra Habiger

    Sandra Habiger is a Certified Public Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Learn more about her work at http://www.sixfiguresaccounting.com/ .

    FAQs About Listed Property

    Which Is Not Classified as Listed Property?

    Cell phones were removed from the listed property classification in the Business Jobs Act of 2010. Another example is property used in a regular business property such as a home office.

    Does Listed Property Qualify for Bonus Depreciation?

    To qualify for bonus depreciation, the listed property asset has to be used for business purposes at least 50%.

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