Depreciation Curve for Used Tractors

[ovrszd]

Don't forget inflation.

Your $10,000 tractor in 2000 would cost you $15,000 today. Inflation is a hidden tax that steals money.

Still not near as bad as a car but cars wear out much more than equipment.

Good point about inflation.

In regards to wearing out quickly. Here on TBN a very small percentage of the tractors are used to make a living. 95% or greater are luxury items that get very little use in a year. So when compared to your car or truck that gets used every day they seem to last longer. They do based on calendar days. They do not based on use.

On the other side of that, a friend of mine has an 800 cow cattle operation. His primary chore tractor is a 125HP CIH cab FWD machine. It averages 1,500 hrs of use per year. In the Summer during haying season on a rainy day it may still get used hauling bales. I'd like to have a dime for every big bale it's carried. In five or six years he's trading it for a new one. Not because he likes the smell of new iron.

 

[Zebrafive]

This tractor was 20 years old when I purchased it,, 21 years ago,, I paid $5,000,,,

Could I get that much for it today? ,,, or has it depreciated?? :laughing:

You could get a LOT more!!!! I really like the looks of that tractor!

 

[Farmer495]

Government has depreciation schedules for what you are ALLOWED to depreciate a tractor for for business use, but realistically they do not depreciate like a car does, so only business cares about the tax credit on devalue, and hoping when they turn the asset over they don't incur an income tax penalty for getting more for it than the books say it is worth.

I see USED tractors asking price MORE than the price paid NEW for the one in the shed right now.

 

[johncanfield]

After equipment is fully depreciated according to the IRS schedule there is a salvage value. I don't remember paying gains on sold equipment or conversely claiming a loss but we aren't an LLC, Subchapter S, or Corporation.

 

[Farmer495]

After equipment is fully depreciated according to the IRS schedule there is a salvage value. I don't remember paying gains on sold equipment or conversely claiming a loss but we aren't an LLC, Subchapter S, or Corporation.

IRS might be different than CRA, we have to group assets be depreciation category and any assets sold the income must be applied the the relevant asset category and used to offset what depreciation you are claiming. If you have more income than depreciaton, you get nailed as income. I am sure every where is different so what ever applies to your location is all that matters.

 

[Industrial Toys]

My accountant always had a knipsheit when I sold equipment that was totally written down and declared the income.

 

[johncanfield]

I had two semesters of accounting in college, accounting principles are fairly consistent year to year but our IRS regulations are a changing minefield. I'm glad we don't have to keep up with that tax stuff but we have to keep good records to take full advantage of our ranching business for tax purposes. If we're lucky we'll break even in 20 years

 

[GrnMtnMan]

Great OP, lol...

I was / still am in the market for a new... (both diesel engine) Ram truck & 40ish hp tractor this year. I definitely wanted a pre-2012 diesel tractor but want a post 2019 Ram diesel.

- I wound up getting a beautiful 'garage queen' 2007 NH TC40DA & am thrilled that it's 13 years old (was definitely willing to buy it at a 'higher price' based on its older age / condition)

VS.

- (still looking for) Got to have the improved transmission & engine block in the the 2019 + "new 4.5' generation Ram 3500 series trucks....

 

[MESSMAKER]

I like it. That's the perfect tractor for 98% of the people. IMO. That back wheel just screams tractive ability. Hey, that's what a "tractor" is supposed to have, isn't it?

I like it too. You could get a lot of work done with that machine. Nice find.