Can I Claim My RV as a Business Expense?

Modern Senior On Vacation With Wifi

 

I had a client that owned his own business and he wanted to buy an RV so he could go on vacation with his family.  He wanted to know if he could write off the cost of the RV as a business expense if he put a sign about his business on the RV while he traveled around the country.  The answer to that is a flat out no.  The IRS is all over that idea and they don’t like it.

 

But, it may be possible to write of an RV as a business expense if you really do use the RV for business.  For example, let’s say you have clients in another city that you regularly visit.  When you are visiting those clients, you normally need to spend time in a hotel.  So, maybe the RV might be a good choice for you.  You could travel to the location in the RV and sleep in the RV instead of a hotel.

 

So I said you might be able to claim it—this isn’t a rock solid deduction.  You’ve got to be able to prove it’s truly a business expense.  There are a couple of things you must absolutely do.

 

  1. You must have a log of all of your miles you drive in the RV.  Not one of those, oh I drove some business miles and write it down later—a very serious, a very real mileage log.  Over 50% of the miles you drive must be used for business to try to take the RV as a deduction.
  2. You must also keep a log of all the nights that you sleep in the RV.  Same rule—over 50% of your nights sleeping in the RV must be for business.
  3. You must also keep your business trips shorter than 30 days so that the RV counts as transient lodging.   That means I can’t buy an RV and drive down to Florida for the entire tax season and spend my summers in Missouri.  (Well I could, but I wouldn’t be able to write off the RV as a business expense.)

 

And the main point you must absolutely keep in mind—do not use the RV for entertainment.  No business parties on the RV.  The IRS is pretty strict about that.  Entertainment facilities are not tax deductible (things like swimming pools, hunting lodges, and bowling alleys.)  Make sure that your RV is for lodging or travel—not for entertainment.

 

So although my client with the sign idea couldn’t claim the RV as a business expense just for putting a sign on it, if he chose to drive the RV on his business trips and stayed in the RV overnight instead of a hotel—he might be able to claim part of the RV expenses for his business, as long as his business use was more than his personal use.

 

Remember, trying to claim an RV as a business deduction is kind of “out there” and highly likely to be audited by the IRS.  You’re going to want to have really good documentation and a good accountant to back you up on this one.

181 thoughts on “Can I Claim My RV as a Business Expense?

  1. Hi Paul,
    Hi Paul,
    Okay, so let’s say you’re writing off the actual expenses at the sites your stopping at – we’re just looking at the motor home. You are buying it for $66,000. Let’s assume that you are depreciating it under the MACRS system. (That’s modified accelerated depreciation.) So you drive to your business location on Thursday. Driving day is business day. You work on Friday and Saturday. Those are both business days. And you return on Sunday – travel day is business day.

    So right now that looks like 100% business use. But just for argument sake, let’s say your business use is 80% for you take a few non-business trips.

    And forgive me for being really geeky right now, I’m on a geek roll!

    The MACRS depreciations schedule goes like this:

    Year one 20%
    Year two 32%
    Year three 19.2%
    Year four 11.52%
    Year five 11.52%
    Year six 5.76%

    Okay, all the smart people are going – “Hey Jan, you said you depreciate an RV over 5 years – why do you have a list for 6 years? I know crazy right? It’s because, they say you’re claiming 1/2 a year for the first year and 1/2 a year on the end. (Really the first year would be 40%, but since you’re only getting half a year, that’s why you claim 20% instead.)

    Told you I was having a geekfest.

    So, In the first year, if your RV was 100% for business, you take 66,000 times .2 and get a $13,200 expense deduction for your business. The second year would be 66,000 times .32 for a $21,000 deduction. Year 3: 66,000 times 19.2 equals $12,672.

    As you can see, you always use the basis of the RV, but you keep changing the percentages based upon the year of ownership. After six years, you get no more depreciation. And MACRS is top loaded. You depreciate more in the early years than in the later years.

    Now let’s say you only use the RV 80% for business. Then you’d take the $66,000 times .8 which is $52,800 and then multiply it by the MACRS figure of .2 to get $10,560. Year two you’d take the 66,000 times .8 times the MACRS figure of .32 and you’ve got $16,896, and so on.

    So that’s all good, right? Nice deductions!

    But what happens when you sell that RV for $45,000 after 5 years? The allowable depreciation on the RV will be $58,397. (If you’re doing the math you’re probalby thinking isn’t it $62,198? But remember, that year you sell it you only get half a year’s worth of depreciation.)
    So, you sell the RV and get $45,000 – so you would think that’s a loss, but you’ve already claimed $58,397 in depreciation so really you have a taxable gain of $37,397.
    Here’s the math: 66,000 purchase price – 58,397 equals 7,603. So the IRS says the van’s basis – that means what you paid for it as far as the IRS is concerned because you’ve been taking those write-offs.

    So you take the $45,000 you get for the van minus 7.603 and you have an IRS gain of $37,397 – that’s what you’ve got to pay taxes on.

    Now you’re going, “Holy Moley, why do I want to depreciate that van?”

    Because! Savings now versus later! First – if you’re a sole proprietor and you’re saving on self employment tax – BAM! You’ve just automatically saved 15.3% in taxes. How awesome is that? Same with partnerships.

    Now, if you’re a corporation – you don’t have that steep savings, but you’re still better off having tax savings now versus later. Or that’s my opinion anyway.

    I know I was pretty wordy, but I hope that helps.

    Oh, since you said you’d be happy to pay, I’ll tell you what. I volunteer for an organization that helps buy equipment for kids with special needs. Here’s a link to their donation page. I’d appreciate if you’d make a contribution. Here’s a link: The Arya Foundation

    Thank you.

  2. Wow, good stuff. Happy to pay you for more detailed explaination but we have a unique opportunity to buy a very nice used Tiffan Class A motorhome (2008) at wholesale, it books for $115K and we can buy for $66000. That said we would like to buy this under our business because we legitamately use it for business but also pleasure but don’t entertain in it. They typical scenario would be that we would travel to Sun Valley or somewhere on a 4 day trip and since we have a mobile botox business (name includes Mobile Botox) Friday afternoon and Saturday morning my wife will have appointments where she provides medical esthetic services in the motorhome. Sometimes they use credit card, sometimes cash and the amount of patients treated varies. The remainder of the time we are enjoying the city and staying in the motorhome instead of hotel.

    So this would be bought and titled in the company name and we expect that we would keep it about 5 years before selling it. We can keep any and all records needed but just want to be able to calculate our true tax savings as we do some cost analysis before we buy this. In general how much of the $66K can we truly right off and calculate for our total cost of ownership over 5 years. It will be worth $45k when we sell it in 5 years.

    Appreciate the help.

  3. Hi Michael,
    A couple of thoughts here. First, and it’s first because it’s important, is that you can’t claim miles and depreciation. When you’re claiming auto type expenses, it’s either mileage OR actual. I just wanted to set the record straight on that.

    Now, here’s the other thing. if you are claiming mileage on the motor home, there isn’t a different rate for motor homes versus other vehicles. You’re getting the same rate that I get for my Mini Cooper – which I’m pretty sure that my car uses a whole lot less gas per mile than you do.

    But that’s why with you RV folks, actual expenses makes a whole lot of sense.

    But first, let’s look at the Jackson case. That did get appealed, but I was surprised that the appellate court upheld the ruling. I really think the Jacksons lost that case not because of IRS 280A(f)(4) – okay I’ve gone over the geek edge here, sorry, but they lost because they didn’t document their usage properly. I have some issues with that case but – this is important – I’m not an attorney. This is a bit of a tightrope. I can give tax advice, but not legal advice. We’re talking about a tax court case that I happen to think the lawyers got wrong. But – I’m not a lawyer. I have to say that. I’m giving you my opinion, but be aware that there is an appellate court case that disagrees with me here.

    But this is my tax interpretation of your situation anyway. My opinion is that you have a valid use for a motor home. (With or without the Crohn’s disease.) You want to make sure that you keep track of mileage and nights used. One reason I believe that the Jackson’s lost their case was that they did not have good documentation of their usage.

    I think that you claiming the actual expenses such as gas and insurance, based upon the miles you drove for business versus your overall miles is a legitimate expense. Also, your business related park fees is a perfectly reasonable deduction. I would still argue that you could claim depreciation based upon your business use, but if you chose not to, I understand that. But your travel costs and park fees certainly would be deductible. The difficult part in claiming the deduction is are you basing it on the miles traveled, or the nights used? It might be that you come up with some sort of combination of both – but however you do it, make sure that you’re consistent. No waffling back and forth each year to suit your purposes.

    Here’s why I think the court case is wrong for not allowing depreciation: They are arguing that the Jacksons had more than 14 days of personal use – which is a point used for taxation of vacation home income. Say for example you have a vacation home in Florida that you rent out, but you also stay there for over 14 days, then you don’t get to claim the depreciation on it as an expense. You could argue that the RV was the Jackson’s vacation home – but they never rented it out to anyone else so that 14 day exclusion is not relevant to their case. That 14 day rule is only relevant for rental properties.

    But here’s the part you need: IRS code 280A(f)4

    it says: nothing in this section shall be construed to disallow any deduction allowable under section 162(a)(2) (or any deduction which meets the tests of section 162(a)(2) but is allowable under another provision of this title) by reason of the taxpayer’s being away from home in the pursuit of a trade or business (other than the trade or business of dwelling units).

    In your case, my opinion is that you are using the RV for your trade or business, and Internal Revenue Code section 280A can’t disallow your deduction.

  4. Hi Chris,
    Your plan sounds like a good use of an RV. Now as far as ownership goes, first talk to your insurance agent because that’s going to be one of the biggest expenses and if it’s cheaper to own it personally – hey, why not just own it and reimburse yourselves for it like you were doing your mileage? Also talk to your banker, which way works best for getting the loan on the RV? Do what gives you the best financial deal.
    Now you mention your partner and “our personal mini van” so I was making an assumption that you and your partner were also a family and not just business partners. Which in that case, I don’t care if the RV is held personally or by the business. But, if I misunderstood and you are only business partners – well that’s a little different. An RV is a huge expense to hold outside of the business for something that would basically be a business expense. So if you’re not a family, you’d want the RV to be held by the business. You’d also need to put something in writing about using the RV for personal use – make some type of contract, maybe rent it from the business or something. It would be more difficult, but I’m sure you could come up with something.
    But I think for you, an RV makes a lot of sense business-wise. Good luck.

  5. Hi Robert,
    You live in Florida and work in Virginia. It sounds to me like you’ve been doing that for awhile. Here’s the thing, if you work in one location for over a year, then it’s no longer considered to be a temporary location. So, if your job in VA is all in one place – then your only write off for your motor home is writing off the mortgage on your Schedule A. (Like you would if you owned a second home.)
    Sorry.

  6. Well, I just spent the last 30 minutes typing in a detailed explanation of my circumstances, but must have misread or mistyped the “CAPTCHA Code.” The shortened version is that I work from my house in Texas for an employer in the Atlanta area, travel to the Atlanta area generally four to six times per year, with most of the trips by car. I have Crohn’s disease, which makes travel very problematic, but travel by car has far less risk of extreme embarrassment than travel by plane. I recently bought a motorhome in large part to enable me to travel, both work and personal, by taking the bathroom with me. I thought I would be able to deduct the per-mile cost of the motorhome (which I expect to be much higher than the standard IRS mileage rate), including depreciation, for travel, plus any business-related RV park fees. However, I ran across a Tax Court decision (T.C. Memo. 2014-160; Docket No. 2513-11; Filed August 7, 2014) that suggests that is not the case, because a motorhome is a home, and my use will not be exclusively for business (but could be more than 50%). Do you have any suggestions? Thanks.

  7. Hi Jan,
    My partner and I own 2 yoga studios. We are set up as an S corp. One part of our business is to travel to other yoga studios / music festivals / yoga festivals to teach yoga. We also sell some products (clothing, stickers, drums, ect). At the festivals we set up a small shop in a pop up in the vending area. Until now we have traveled in our personal mini van, paying ourselves for the miles. Our lodging has been hotels/ guest rooms while at studios and tent camping while at festivals. We would like to purchase a small RV to travel and sleep in. Does this sound like a valid option? Would the title/registration/insurance need to be in the company name? Does this rule out personal use of the RV?
    Thank you,
    Chris

  8. I’m an independent contractor. I live in FL and work in VA. I am planning to purchase a Class B motor home to drive to VA and live in it while I’m working. I would work 30-90 days at a time drive home and return as my work dictates. What would be my tax write offs?

  9. Hi Heidi,
    Hmmmmm. Okay, I’m going to be really nit picky here. When you have a home office – like I have a home office upstairs at my house, one of the criteria is that the usage is 100% business use. So with my home office, I don’t have a bed in there for out of town guests. I don’t do my craft projects in there, it’s only for business.
    So – when you say that you use the camper 3 – 4 weeks per year for family travel, then that wrecks your home office deduction. So it wouldn’t hold up in an audit.

    Does your camper have a kitchen, toilet, and sleeping facilities? If the answer is yes, you can at least deduct the mortgage interest on your Schedule A.

    I think you may be better served is you create a storage space in your basement for your business supplies – that’s a space you will dedicate 100% to the business and use that as your home office claim. Go ahead and use the Camper for your home office space – but I wouldn’t claim the camper as a deduction. (Just like I really like to work on the purple sofa in my living room. It’s the best place to write these blog post answers from – but it’s not 100% dedicated to business. My husband sits here, the dog sits here, we have company sometimes. But it’s truly my favorite place to work. I just can’t claim a deduction for it.)

    I really like the idea of you using the camper for your home office. But because it doesn’t meet the 100% business use criteria, I can’t say that it’s okay to write it off. And I’m sorry about that because I think it’s such a cool idea.

  10. Hi David,
    So when you travel, you are in one place at a time for less than a year, right? Basically, it’s a temporary job location. Are are allowed to claim temporary living expenses when you are at job location for less than one year. So, it sounds to me like you have a legitimate claim here. They would go on your form 2106 – employee business expenses and they would be subject the 2% of your AGI. But still, I’m guessing that you’ve got enough expenses there to make a claim.

    But here’s the thing, you can’t deduct you RV payment. You may deduct the interest, and you may deduct depreciation. But the payment itself is not a deductible expense. Just like when you claim your mortgage interest on your schedule A – only only deduct the interest, not the actual mortgage payment. It’s kind of the same thing here.

    But I think it does sound like you’ve got a legitimate business purpose for your RV.

    Remember, to document everything, and if you do have some personal use, to only expense the business percentage of the use.

  11. Hi Mike,
    It sounds like you’ve got a legitimate purpose for your RV usage. I would definitely deduct the miles and your overnight stays.

  12. Hi Donna,
    It seems to me that if you’re a writer, writing about travel and RVing, then your RV expenses – or at least some of them, should be a legitimate business expense.
    I don’t know that selling RV mugs online would substantiate your RV as a business expense, but it probably would help support your claim that you’re writing business is about travel. (Or part of it anyway.)

    A good source for finding a tax professional is the National Association of Enrolled Agents. NAEA.org

    At that site, you can type in your zip code and you’ll get a list of enrolled agents near you. Call a few of them and find out who specializes in small businesses.

  13. Hi Steve,
    I think you may be able to make some of the expense work – at least for claiming a home office. But remember, you’re claiming a home office here, so you’re not writing off your miles, or camping expenses, just a portion of the time and area that she is using for a home office. And, of course, document, document, document!

  14. I have a camper (not RV) outside my home and we only use it as a family 3-4 weeks per year. Recently I moved out of my home office to make it a child’s bedroom. If I truly move out to the camper and use it as an office 45 weeks/year, can I claim the square footage (like I used to claim the home office that has now become a bedroom)?

  15. I am a superintendent that travels mostly full time year round. I have a 5th wheel that I stay in opposed to a hotel. I am wondering if I can deduct the payment as well as the rv park where I keep it during my work stays. I am in one spot for 4 to 8 months at a time and during this time I am working. Then I go to the next project and do the same. If I do go to my actual home, it is but for a weekend once or twice a year and I fly to that and rent a car and fly back.
    please let me know if this is good.

  16. I plan on going to fleamarket’s craft shows and festivals selling diamond willow walking sticks that I make. I plan on using my RV for this purpose can I deduct mileage and overnight stays ?

  17. Hi Jan,
    My husband is employed full time, and I have an online business. I’ve written several books and have created several online courses (none of the topics are RV or travel related … yet!).

    We’re considering buying a class A motorhome, which we will finance thru a bank loan.

    I’ve stated my employment as “author” for the past 5 years of taxes. Do you think it would be a red flag for the IRS if I started writing travel/RV related books and deducted a portion of the RV expenses as “research”?

    I also have a custom printing novelty gift business that utilizes drop-shipping, so I don’t stock inventory. If I created a line of gift items (mugs, posters, t-shirts, etc) with a travel/RV/camping theme, could I deduct some of the RV expenses? Currently, I don’t sell the items “in person”, it’s all done online. So there aren’t any flea market or craft show type expenses. But I’m open to carrying a small inventory and selling at RV events, parks, campgrounds, etc. if that would satisfy IRS requirements.

    Also, do you know of any tax advisors who specialize in tax prep for online businesses? We live in Arizona.

    Thank you so much for all the great info you share!

  18. Hi Jan,
    I know for my business I can rent a car and go to a hotel and claim the car rental, gas, and lodging for a business trip.
    Can I rent an RV and claim the RV rental as a tax right for transportation, lodging, and gas?
    I have looked everywhere for the answer to this – but still have been unable to find it.
    I am going on a long business trip that is going to require a lot of miles and lodging for several nights and I thought it sure would be convenient and less expensive if I were able to rent an RV, vs renting a car and staying in hotels every night. I would greatly appreciate your advice on this.
    Thanks,
    Bryan Lee

  19. What about Travel trailers? We have a travel trailer in our Driveway that we use for family vacations 3-4 times per year but the rest of the year it’s merely in our driveway.
    My wife works from home 3 days a week for her job as a case manager and we were wondering if using the trailer for her business use would be a better option than a room in our home.

  20. Hi Paul,
    I’m thinking that your RV is your personal residence. That said, you so short term (less than a year) contract work. Housing, for short term job positions is an employee business expense. Or a business expense for business owners. You would have a deduction there of some type.
    Bottom line – you should document – document – document! It probably makes sense to sit down with an accountant to go over the numbers. Run a few scenarios for typical situations. Remember, that as your primary home – you RV mortgage interest would be deductible, even if you couldn’t use it for business. But I’m thinking you would have some good business usage out of it as well.

  21. Hi Jan,
    I am considering purchasing an RV Class A Motor home as my primary residence and use it for business. I would drive to a client site and park in an RV Park and stay throughout the contract 6 months to a year. My personal use would be on the weekends. Also, would travel from one client site to another be a deductible business Expense? In general what recommendations do you have for my consideration?

    Thanks – Paul

  22. Hi Takisha,
    I would count the RV fees, and either the RV mileage or the actual RV expenses whichever is better for your client. You can’t count mileage plus repairs – it’s actual or miles.
    As a business owner, you can count actual overnight expenses, not per diem costs. So the point of having the RV is not paying for hotels, so you can’t say its a $75 expense if that’s the hotel cost. You claim the real expense.
    How much RV use is business vs. personal? You could claim a percentage of the business use as depreciation.

  23. Hello,
    I am wondering, if a business owner travels to a city in their RV and sleeps in the RV, can they count the nights they sleep in the RV as travel expense. As an example a hotel would cost $75 a night but instead they stayed in the RV, can they count the $75 a night in the RV?
    Also if they use the RV for business travel, can they count the maintenance in the RV as well as mileage or just mileage?
    I have a client with this issue, we are already counting the interest on the loan on the taxes, they meet that criteria for sure.

  24. Hi Chris,
    My personal recommendation is to buy the RV under your own name, and then reimburse yourself from your business for your business use. Check with your insurance agent. I’m told that in most cases, your insurance rates are lower if you put it in your own name.

    Also, if your business use drops below 50%, there are issues with taking a section 179 deduction. That’s why I prefer to depreciate the business use rather than to take a full write off.

    But if you put the RV in your own name, have the business reimburse you for your business use, then you won’t have those problems with the over zealous write off.

  25. Wow, what a great article and thank you for responding to all of these comments. I have a manufacturer’s rep company and travel about 90 nights a year. I am considering purchasing a Class C motorhome to use for business travel and lodging in lieu of hotels, maybe 30-40 nights this year. I’d also like to get some personal use out of this on the weekend with some overnight camping trips. I have seen all kinds of different numbers on business/personal usage and how the IRS might view this kind of situation? I am leaning toward purchasing through my business, but I am not sure how much personal use is too much?

  26. Hello Jan,
    I bought my RV three years back for my job. I travel to shutdown maintenance work at oil refineries and I use the RV to stay in at parks close to my work. I pulled it about 18,000 miles last year for work on 10 different jobs. I haven’t deducted the RV on my taxes at all from the time I bought it. Does it qualify as a deduction?
    Thanks for your time.
    Dwight

  27. Hi Meg,
    The answer lies in how much personal use you also hadd. Is your 5th wheel 100% for business? Or is it intended and used for fun also? You’ll want to claim your work related expenses for the business trips you were on – but if you are claiming depreciation – then you’ll need to limit that to your business use percentage.

  28. Hi Jan,
    I run an annual event and have my year round office in my home. This event takes a whole year of planning, sales and registrations. My event is held for one week about 100 miles from my home office. I plan to use my 5th wheel toyhauler travel trailer as my office at the event. I also travel to similar events and shows each year to promote my event. I use my 5th wheel travel trailer as my trade show booth at these similar events. I pass out flyers, posters and play videos showing my event. This is one of the main ways I interest people in coming to my event.
    I purchased my 5th wheel travel trailer in October 2016 and used it for appox 30 days in 2016 going to similar events and trade shows. How much can I deduct for the use of this 5th wheel travel trailer for 2016?
    I have kept complete logs and records.
    Thank you so much for what you do!
    Always,
    Meg

  29. Hi Clay,
    For me to run actual numbers for you – that would require payment. Sorry, I only answer general questions in the blog. (I gotta eat ya know?) But here’s a general answer for you.

    First, it looks like you’d have over 50% business use of the RV. But remember, when using the RV for vacation, you’re not using it for business “entertainment” because that negates the deductibility. Personal use – yes, entertainment no.

    So you’re going to carefully track your mileage and your days for your business use and your personal use to figure what percentage of your expenses are deductible. So you wouldn’t get a $10,000 deduction every year because your business use would be maybe half of that. Also, you wouldn’t have to use straightline depreciation, you could uses something called MACRS – it would allow you to front load the depreciation – 20% year 1, 32% year two, 19.20% year three, 11.52% years 4 and 5, and 5.76% year 6. (Yeah, 5 year depreciation schedule gives you 6 years of depreciation, don’t ask me, I didn’t make up the rules.)

    And yes, you can write of the interest for as long as you are paying interest – it’s a legitimate business expenses. Once again though, you can only write off the percentage of business use interest against the business. (You may be able to claim the remaining interest as interest on a second home on your schedule A.)

    Your tax benefit would depend upon just how much of a percentage of use you can actually claim, combined with your actual expenses, in relation to your tax bracket. There are just too many variables there to give you a figure without a sit down at the old computer and doing some actual crunching of numbers.

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