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.
- 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.
- 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.
- 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.
Hi Jan,
I currently own an ATM business and I am considering purchasing a travel trailer in order to create a mobile ATM location. I would buy a 5th wheel travel trailer with storage space for the ATM and equipment. The living quarters would allow me to be close for maintenance and security, the generator would allow for operation, and the ramp would double as a platform to setup the ATMs. I assume approx 6-10 weekends a year to use it for business and maybe 3-4 for vacations. If I were to purchase a $50k 5th wheel, can you give me an estimate of the tax benefits? If I were to depreciate the cost of the travel trailer over 5 years does that mean I’d get a ~10k deduction each year? Can I write off the interest paid (~200.00 a month) even after the 5 years?
Hi Ken,
It sounds like you’ve got a good case of using your RV for business. I would deduct 100% of your expenses. I would depreciate the vehicle and also deduct the interest payments. You cannot deduct the principle part of the loan.
Hi Jan,
I am a contract instructor teaching for a high tech company and I travel a week at a time to various locations around the country. I’m paid a flat travel expense rate based on location and number days in class. I operate as a sole prop right now and I have purchased an RV (travel trailer) earlier this year. Instead of flying, hotels and rental cars I just tow the RV – to most engagements, anyway – and stay in the RV while working. I stay busy enough that the RV sees no personal use at all, really. It is either with me on the road at work or in the shop for routine and warranty repairs. May I deduct all money spent to own and use the RV? Should I depreciate, or should I deduct loan and interest payments?
Thanks so much!
Ken H.
Hi David,
I think that’s the best option in your case.
HI JAN,
I purchased an RV. I traveled from my home based office, Las Vegas NV to manage my rental property in Rome NY. I met with tenants to manage, inspect and collect rents and determine what repairs were needed at my property.I put over 5000miles and paid RV expenses for the round trip, (fuel, site rental, meals, insurance, repairs). I keep good records, mileage from point a to point b, site rental receipts, etc. I plan to deduct only the business portion of use, 50%. Is that the best option in my case?
Thanks Jan. The main job is indeed a full time. However, my 2nd job is as a computer consultant. I did pick up a small contract while in VA ($1,600) and the idea was the rv would be and has been my office. This year I do not have a full time job, but I do have a 6 month high dollar consulting contract and it might resign for another 3 to 6 months if I can get them to agree. This sounds like the little rv should/could be deducted for 2016 and I’m not sure about the bigger RV because the family lives in it with me. Or is this acceptable?
Hi Tom,
I’m not sure. It sounds like you’re a wage earner – so business expenses will go on the form 2106. So, you might be better off claiming the RV as a second home. But that might not help you much either.
Normally, I’d try to claim “temporary job expenses” but it sounds to me like your job in Virginia wasn’t supposed to be a temporary position. I’m not seeing a tax credit or a deduction here. Maybe moving expenses.
Now if you could show that your job in VA was only intended to last less than a year – then I’d go for the temporary lodging, and meals, and mileage. But you’d have to be able to show that was the case.
Hi Bill,
You may claim depreciation on the RV. Now – here’s the flip side. If you claim the RV as a business asset – then the interest should be deducted as a business expense, not schedule A. Then you will also claim the depreciation. But you will also claim the sale of the business asset – in which case there is the depreciation that may be recaptured. I’d run the numbers both ways before actually amending.
My family and I lived in Austin, TX. I took a full time job in N. VA and didn’t want to move the family until I knew the job was good. I bought an old RV off Craigslist for $3k and then put blood, sweat, tears and another $3-4k into it making it livable and safe to drive. I drove to and from VA at least twice, living and working away from my family most of the year. It was only used by me except for one trip with the family to VA to find a home. I took pictures of the rebuild and I miles put on the trips to/from. Since it’s not worth much to begin ~$7-8k if resold it and it’s an 1989 rv what’s the best way to use it a a tax credit? The job fell through right after I drove the family to VA and then we had to live in it (post tax season/year) for almost 6 months and finally had to buy a 2nd bigger (~$10k) rv to live in until we can put roots down again for this displaced family of 6. Thank you!
Hi Jan,
Great info here, and I’m sure my answer is in here some where :).. But ill still ask
I purchased an RV early 2015 strictly for business Travel and Lodging. I wrote off the mileage, cost of the RV park/campground, and repairs/maintenance. AND a second home interest deduction on the loan. As I read through this, Im seeing I can take a depreciation deduction? of 20%? Is that off the purchase price? I have sold it since, as I don’t do work for those out of town clients any more. But am considering amending my 2015 Taxs. As that would be a considerable write off..
Thank you so much for the info.. I may be calling you as a new client :))
Best
Bill
Hi Chris,
I would shy away from claiming a Section 179 deduction on your RV. Two reasons – first, you already own the RV and you would need to make a purchase for the 179 deduction. Even if you sold it to the “business” it would be a related party transaction and would not qualify for the 179 deduction.
I also wouldn’t buy a new RV for the 179 either. There’s a court case, Robert D Shirley v. Commissioner of the IRS: http://www.ustaxcourt.gov/InOpHistoric/shirley.TCM.WPD.pdf where the taxpayer loses his 179 deduction because of the IRS determined that motor homes are primarily used for lodging which makes you lose the Sec 179 deduction.
I’m thinking you’re most likely to wind up getting audited, and you have a very high likelihood of losing the audit if you do, so I’d recommend just taking depreciation.
Hi Brad,
That’s a really good question! So there are two ways you would want to claim the RV. The first – which is what you’re doing is by claiming mileage. The second, is by claiming the actual expense of owning the RV, based upon your percentage of usage. So you know you spend well over 50% of your time using the RV for business so we can use actual expenses.
What are those actual expenses? That would include the fuel, the repairs and maintenance, and the depreciation on the vehicle. So – lets say you purchased the vehicle for $50,000. You can depreciate it over 5 years using the MACRS depreciation schedule for a vehicle. The MACRS depreciation schedule goes – first year: 20%, second year: 32%, third year: 19.20$, fourth and fifth years: 11.52% each, and 6th year: 5.76%. (Yes, I know it’s a 5 year depreciation schedule – it’s accounting, don’t expect things to make sense.) Also, remember that your insurance would be an actual expense.
Often, depreciating your RV gives you a bigger deduction than the mileage, that’s why people do it.
But – there are some things you can deduct with both systems. For example: your hookups and camp fees. That would be an expense in addition to either your mileage or actual RV expenses. Another RV expense could be the interest you pay to own the RV itself.
Hi Brenda,
That’s an excellent question. Yes! Even if the loan is for 10 years, you can depreciate over 5 years.
Hi Jan. I am taking a $100,000 severance from my current employer on Nov 1st and will be starting my own company with the money. I will be building out my own software product but will be consulting for clients as well. The clients are spread out across the country so I intend to buy an RV so that I can travel to each client and stay for longer periods of time. We sold our house last year so I am able stay on the road and work most of the year. Two questions. Would the RV qualify as a valid business expense in my case? Would you recommend taking the section 179 deduction since it’s so late in the year with the severance?
Also, we have an Airstream now that we have financed. To claim a deduction…would I need to buy a different RV, could I use the Airstream we have or could I sell it to the business?
Hi Jan,
Every 5 to 6 weeks I take my 5th wheel 325 miles to my place of work and spend 5 nights on the company premises. I don’t get reimbursed for the expense from my employer. I work from home 3 days a week but part of my employment includes these 650 mile round trips to my work place. I have spent well over 50% of nights on business versus pleasure. Seems I pass the test for deduction…..question is; how do I deduct?? I have already deducted mileage on my vehicle but aren’t sure how to deduct the mileage and use of the 5th wheel.
Kind regards, Brad
Hi, Jan
We started a small business this year. We go trade shows in different cities almost 2-3 weekends out of A month to sell our products.
So far, we’ve used our Van that we already had, but it doesn’t have enough room for all the equipments and products. So we bought a used truck for the business this week. Now we need to purchase a trailer or travel trailer.
If we buy a travel trailer to hook up to the truck, besides enough room for all of our equipments, it can save us a lot money because hotel expenses are taking too much portion in our business trip.
If we purchase it with 10 years loan under my husband’s name, can we use 5 year depreciation or MACRS depreciation schedule?
Thanks Elsa!
Hello Jan,
I read every one of your responses, and I really appreciate your work.
You are spot-on!
Kind regards,
Elsa K.
Hi Robert,
I’m a little nervous about claiming a Section 179 deduction for an RV – that’s where you write off the whole purchase price in the first year. There’s a couple of court cases out there where the 179 deduction has been thrown out so I’m much more in favor of depreciating the motor home.
Using the MACRS depreciation schedule, you’d write off 20% the first year, 32% the second year, 19.2% the third year, 11.52% for both the fourth and fifth years, and 5.76% in the 6th year. It’s not as sexy as writing off the entire purchase price in one year, but it’s a whole lot safer and less likely to get you audited.
Since you’re using the RV as an office – I’d write off the operating expenses of the RV while it’s at your place as your office expenses. And while on the road, I’d write off the gas, maintenance, lot fees, and basically any charges you have for the RV.
It sounds to me like using the RV for your business makes a lot of sense and would be a very legit business deduction.
Jan, my wife and I have a tech & marketing support business. We are now using our garage as an office, but we want to buy an RV and use it on our property as a home office. We also want to use it so that our customers can come visit us and drop off equipment. We would also like to use it for traveling to tech conferences and events that are out of our business area (other states) that pertain directly with our business. Rather than renting hotels we would prefer to take our RV to these out of state events. I anticipate the events will be approx a total of 1 month total per year for all of them. Probably about 3 or 4 of them, and about 1 week each at different times. We have no plans of using the RV for personal use and will only using for a home office at our business address (home) and use it for business travel out of state.
(1) Can you tell me if we can deduct any of the purchase price of the RV?
(2) What other expenses can we deduct on the RV as well when using it stationary as a home office?
(3) What expenses can we deduct on the RV when traveling to out of state business events?
Thank you so much!
Hi Bill,
That sounds like a great trip. And – I do think that makes your RV count as a 2nd home so you could write off your mortgage on that on your Schedule A. Or, if you did choose to let people rent it at your B&B, then I’d still do it using the vacation home rental rules instead of putting it under the wing of your business.
Jan Thank you so very much for the information. I have considered using the RV as a Vacation home, but haven’t found the right spot to park it as of yet. We do, at this time, also use it for personal use. In fact we just returned from a 38 day trip from Virginia to Seattle Washington, by way of the Glacier National Park and many other beautiful places throughout our great nation of ours. Great trip. Also thanks for the mention of our B&B.
Hi Chris,
I think it makes sense to use your percentage of business miles to determine how much to depreciate your RV for business use. I don’t think you need to register your business with the DMV, but you may need to register your business with your state’s secretary of state’s office. It also depends on the states you’re doing business in, some states may require registration as well. You’ll want to make sure you check with the state’s you’re working in. That’s the downside of working and traveling – keeping up with all the different rules. But it sounds like you understand the concepts and you’re keeping good records so I’ve got confidence that you’ll handle the state stuff just fine.
Hi Bill,
I would think so. I’m assuming that you also use the RV for personal use, so I’d treat it more like you are renting out your vacation home instead of making it part of your B&B business and use the vacation home rental real estate rules.
Okay true confession, I saw your website, I so want to stay in your cabin it looks wonderful! How awesome! Sorry I got distracted, I usually don’t go scoping out websites but I saw B&B and cabin by a pond in the woods, I had to look.
I guess one issue would be, how often are you renting out the RV? If you rent your home out for 14 days or less (and the RV is really a second home, right?) then you are not required to report income on that rent at all–which gives you another good reason for keeping it out of the business. But – if you’re renting it more often, then maybe it makes sense to move it over to being a business asset.
I’m afraid that I’m being wishy-washy here. I think using the RV is a great idea, where it will fit on your tax return is going to depend on how much usage you’ll be getting on it. And quite frankly, I think that can change. You might try it once in awhile to see if it’s a good idea. (Keep on personal return, rental of vacation home.) It might be a popular sales item and you’re renting it all the time – move the asset to the business. I can see this evolving with time.
Oh, and if anyone reading this is looking for a B&B in Virginia, check out the website this place looks awesome! http://scentsofcedar.com/
Hi Krista,
I think (and note this is just my opinion, I’m guessing if you asked somebody else you’d get a different answer), I think you should buy the 5th wheel as a personal use item. Then you can attribute costs to the various businesses as needed. Does that makes sense? Buy it, own it, claim a deduction for the mortgage interest on a second home on your schedule A, but then you can have the businesses reimburse you for the business use that each business has.
The reason I say this is because you have so many businesses – let’s say the corporation bought the 5th wheel, then it got audited. Well, it might smell funny to the IRS – the corporation buys an RV and rents it out, but the corporation isn’t in the business of renting RVs. If you own it personally and reimburse yourselves for the usage, you’ll have to keep good records for the usage, it will be properly attributed to each business, and I think you’ll pass the IRS sniff test much better.
Like I said, that’s my opinion.
Have purchased an RV I am involved in a home based business and plan on traveling to events/festivals to market our products. I also talk with people about the products and business as I travel. I would also be using this as my mobile office to manage my existing business via the internet. You have commented about documentation and I have and app Everlance that I document my business miles with. What I was hoping to do is depreciate using the % of total miles used for business-is this possible. Do I need to register with the DMV as a business? Thanks
My wife and I operate a Bed and Breakfast. We use three rooms in the Main house and a cabin out by the pond in the woods. We also own a Class “A” RV. On many occasions our guest have requested they be allowed to stay in the RV instead of a room or cabin because they have never stayed in an RV. If we should allow them to use the RV, would we be able to use it as an asset of the business and deduct and or depreciate it for the time it is in service?.
Hi Jan,
I have a triple question for how we should purchase our 5th wheel. First of all I am a marketer and have several different businesses and blogs. I am also a real estate agent. My husband is an insurance agent and is formed as a corporation. Our daughter is a model / actress and has her own business. Because we have multiple businesses and needs for a 5th wheel we do not really know who we should buy the RV under or how many deductions we can take. Could my husbands corporation buy it and lease it to us? Sometimes we need to stay in a trailer for my daughter, I can do my marketing & blogging out of the RV. I am also expanding to some remote areas to help develop tiny home living and need a place to stay. We will be continuing our insurance and real estate businesses for three years until our daughter gets out of high school and then we may take the rv on the road and use it for my marketing business and possible claims adjusting for my husband. We just want to be smart about how we set this up. Do you have any suggestions?
Hi Bob,
A couple of thoughts here. First, with an S corporation, you can have expenses exceed your income and be deductible. So, the simple answer is yes but you want to make sure that you’ve got “skin in the game.” Do you have “basis” in the corporation? Usually the answer will be yes, but I’m tossing that out there in case you have some sort of non-recourse loan or something which could prevent you from claiming your losses.
The other thing is — will it be the RV that creates the loss? Remember, that claiming an RV as a business expense is going to be a red flag. You want to dot your i’s and cross your t’s and make sure you’ve documented everything. I’d also be more inclined to use depreciation instead of trying to claim a section 179 expense. I know other accountants would argue with me over that, but I feel if you’re going make a “risky” claim for a deduction, at least be more moderate in your claim. But that’s my opinion, not a rule.
Now, about donating your time to the police departments. First question – is your business that of a criminal science consultant? Or is your business something completely different? I’m asking because it makes a difference.
First – there is no tax deduction for donating your time. Let’s say for example that you were a Boy Scout Leader instead. You spent 500 hours leading camping trips, meetings, and other activities for the year. Your charitable donation on your tax return would be zero! Zero, zilch, nada. Now, you may have spent money on those trips, your scouting uniform, or equipment – you could deduct that, but not your time.
So, back to donating your time to the police department – your time would not be deductible. Same situation, it’s a donation of your time. You may be able to deduct expenses that you had, but you would want a letter from the police department thanking you for your contribution of that time and talking about the expenses you might have had to back up your donation.
Now, if you are in the business of consulting to the police – although you still can’t deduct the time you spend, you could probably deduct your expenses because you were donating your time (I assume anyway) to attract their business in the future.
I hope this is making sense. No deduction for time, but yes deduction for expenses.
Hello Jan,
First of all, thanks for proving a great service to people BEFORE tring to take the plunge on using an RV for business deductions. My question is a bit more oblique. If I create a Subchapter “S” Corporation and use the advice you have given others and carefully document, I am concerned about the issue of profitability. Am I limited to taking deductions based on the amount of income I generate or can my deductions exceed income in the first few years of business? Also, if I choose to donate my time consulting to police departments around the country, are my charitable deductions limited and if so, how?
Hi John P,
I believe maybe is the best answer I can give you. Do you normally stay in a hotel near the hospital when you’re on call? It’s sounding like a good argument to me. But don’t forget not to mix business with pleasure. I’m thinking you’ve got a good case here, (a really good case), but I just want to make sure you can back it up with something else.
Hi Lana,
When I hear the phrase “write off” I tend to think of the Section 179 expense deduction. Which is where you write off the entire expense in one year. I personally don’t like to use the Section 179 deduction on RV’s, but another accountant would tell you I’m nuts. There’s room for interpretation there.
But yes, you could certainly claim the depreciation, insurance and interest. I’m thinking your business sounds perfect for using an RV as a business deduction.
Once again, be sure to keep really good records.
Here is a tax question wonder if you would know the answer.
I have a job at a Hospital. I’m required to take call. I’m required to be within 30 minutes of the hospital. If I buy a mobile home to stay in at the hospital while on call is the cost of the home deductible on my taxes as a work expense?
Hi Jan,
My husband and I are self-employed travel photographers (have been in the business since 2009). The total travel amount we do is around 4 to 5 months per year. We usually write off all hotel, food, and transportation expenses and we keep track of those expenses. We were thinking about purchasing an Airstream travel trailer because it’s just a lot easier to carry all the equipment and personal things on a trailer than in a car or on a plane. If we bought it new, can we write it off as a business expense? Would we be able to claim the depreciation of it over 5 years plus other expenses like insurance and interest? We would be using the trailer solely for business since all our trips are for business/work only. Thank you!
Hi Jay,
So we’ve got a couple of things going on here. First is – would the job last 10 months or over a year? The reason that’s important is – if the job is only for 10 months – then you could use the RV as a “temporary housing” for a short term business. There’s a whole lot deductible there. If the job is to go for longer than 12 months – you lose all of the temporary housing benefits and most of the deductions.
Now – if you lose out on the temporary aspect of the job, you could still claim the mortgage interest on the RV as a deductible expense on your schedule A as the RV would really be a second home for you. But it’s not as big a deduction as you’d get if you claim the temporary lodging expense.
If it were to be a temporary assignment – you’d be able to claim the RV rental space, meals, mileage, and depreciation.
I am self-employed contractor, working in the petrochemical industry/oil and gas industry. I have worked overseas for 25 years but am considering a US job. The job is 7 hours from my home in Louisiana (job is in Texas). I am researching to determine if I should purchase and RV as my “home” while on the job. Job would likely last approximately 10 months, but could go longer than 12. What sort of deductions would I be eligible for? Can the cost of the RV rental space be deducted? Mileage to and from home to job? Meals? Depreciation?
Thanks for the assist.
Hi Roger,
I think you’ve got a good example of being able to claim your RV as a business expense. For a lot of people, we’re talking about using it as temporary housing. For your business – it’s actually going to be your main office building (and bathroom). I think you’ve got a great business purpose there. Go ahead and claim the depreciation, registration, insurance, and DMV transfer taxes plus the interest. I think you’ve got a winner there!
I am a general contractor and need a site office for new construction. I was thinking of buying an RV and using that as my site office and bathroom for my workers. I would just drive it to the work site and park it and not use it to sleep in. I would need to drive it to empty the sewer tank every week but that is probably only a 20 mile round trip. At least I would be taking it off the site every 7 days. It would be used 8 hours/day M-F as a site office and bathroom. Could I claim some depreciation and perhaps registration, insurance and DMV transfer taxes and interest on my loan for that vehicle/mobile office? Thx.
Hi Lynn,
I think your idea about running the photo business out of the RV sounds pretty cool. Like I’ve said before, (and I’ll keep saying) document, document, document! Keep track of your business use vs. personal us of the RV. Now for you, it’s sounding like it will be 100% business – I mean you’ll have your printing and editing equipment on board the RV so this should be easier for you. But if you do have any personal use – do be sure to document that also. Document the business miles versus the personal miles. Also document the nights you sleep in the RV for business and the nights you sleep in the RV for personal use. You really want that all documents.
I would think that for you – I would write off all of your RV expenses – or at least the business use percentage. Your gas, your hook ups, your site rentals. And of course, I would depreciate the RV.
I would definitely depreciate over trying to use a Section 179 expense. You will depreciate over 5 years using MACRS. It’s not as fast as claiming the 179 expense deduction, but it’s definitely safer.
I am just starting my own photo business. I want to purchase an RV to run the business out of. On site photos, editing and prints. What type of tax write offs can I use for the RV?
Hi Michael,
First, about that 1099. Personally, I wouldn’t give you a 1099 for the truck usage. If you get paid exactly what your truck usage costs, then that’s an “accountable” plan and it’s not taxable to you at all, so no 1099. If you get paid a “per diem” amount, that would be coded as an L on your W2. You’d write that off on a form 2106 so it shouldn’t show up as taxable to you either. I’m guessing that you write off the full amount of the 1099 so it’s a wash anyway, I just hate to see you pay extra tax if that’s the case.
(Or I could be wrong and your employer rents your truck from you–that would be a 1099 scenario-that would be correct.)
Anyway, about the RV: You live in Austin but you work in Midland. It sounds to me like you’ve been working in Midland for over a year. The “over a year” part is important because once you’ve worked at a location for over a year you lose the ability to claim the housing expense deduction because really, you live in Midland for all intents and purposes. You go home to visit your wife, but Midland is your “tax home.”
But–you can deduct the interest on the RV as a second home. So that’s going to go on your Schedule A–and that works better there than on the 2106 anyway. But I don’t think you could depreciate the RV as a business expense or deduct the lot rental or anything like that. Really it’s just a housing cost for you.
I am from Austin, my wife lives there and has been unemployed for 3 years and just recently gained employment in the past 2 months. I work in Midland. I bought an rv to stay in while in midland. I go to Austin every 6-8 weeks. for the rv, I am buying it from a person that is financing it to me (I took over payments from her bank). what, if any of this scenario is deductible. I get a 1099 and w2 from my employer. 1099 is for usage of my truck w2 is my wages. thanks
Hi Hank,
Could you use an RV as a business expense? Probably. Would you want to drive an RV from San Diego to South Carolina? That’s up to you. Me? I’d think I’d rather fly and stay in a hotel.
But could you do it as a business expense? I think it’s quite possible. You’d just want to make sure that you keep good records. (Just like I’m a broken record saying, “keep good records!”)
Hi Butch,
That’s a really good question. First, I do recommend using a tax software instead of doing this by hand no matter what your tax situation is, but especially when doing depreciation because of the carry forwards and things like that.
An RV has an “asset life” of 5 years. (Well, cars, trucks, and buses do so I’m lumping RVs in the same category.) So even though it has a class life of 5 years, you wind up depreciating it over 6. (We’re accountants we like to make it difficult!)
The most common method for depreciating something is called MACRS. (Modified Accelerated Cost Recovery System-I’ve been saying MACRS for so long I actually had to look up the real words.)
That means that instead of depreciating an asset equally over 5 years (20% per year), you’d use the following table:
year 1: 20%
year 2: 32%
year 3: 19.2%
year 4: 11.52%
year 5: 11.52%
year 6: 5.76%
And there’s some other rules too, like if you bought the RV in the last quarter of the year you’d have different depreciation numbers. (Long explanation, I’ll skip here.) See why I recommend using the software?
But at least now you have a clue if you’re close to being right. Let’s say your 5th wheel cost $50,000 and you bought it in June. For the first year you’d claim $10,000 in depreciation. (20% of 50K = 10,000) The second year you’d claim $16,000 (32% of 50K) and so on.
And although it’s not the most exciting reading in the world, the IRS has Publication 946 – it’s all about depreciation. https://www.irs.gov/publications/p946/ar02.html
Now, why use MACRS instead of just writing off $10K per year?
Well, you get to write it off faster! And, since you’re retiring in 2 years, that’s especially good for you. (Sorry, I’m writing a whole book here aren’t I?)
You see though if you took a Section 179 expense and wrote off the whole thing–well then you’d have to reclaim part of that write off as income when you retire. You don’t want to do that. But if you depreciate each year, well, you’ve taken what you should have and there’s no recapture when you retire.
So, using MACRS over the 2 years, you’re writing off $26,000 instead of $20,000 under the straight line method. That’s the beauty of MACRS, you front load the depreciation. And, since you’re retiring in two years, it really makes sense for you to do that. (It’s also pretty much standard practice.)
Good article! I am starting a new business this year where I will be giving talks at local venues (san diego area), but also potentially back in Georgia, South Carolina, and Alabama where I had previously lived and still have many contacts. Would an RV be a viable option given this senario? Also, do travel trailers fall under the same rules? I would potentially need a smaller vehicle if I am in the same city for several days and it would be nice to drop the trailer and be more mobile.
Thanks,
Hank
I work construction and live in my 5th wheel during the week. I use my trailer exclusively for work and will until I retire in 2 years. I purchased the 5th wheel 5 months ago so if I can depreciate it, how much and at what rate for how long?
Hi Shawn,
Only if I can come with you!
But seriously, probably not. I mean, is your travel blog done for profit? Is it making a profit? I’ve done a lot of tax returns. Bloggers can make really good income, or really small income, or no income at all.
So here’s what I’m seeing: RETIRED. So, I’m guessing that you are not currently in the business of blogging, nor are you in the travel business. Maybe I’m wrong there, but I think you’d have a tough sell to write off the RV.
I think you’d have to be able to prove your travel blog was a real business before you could try to write off the RV. But if you could – then you might be onto something.
Hi.
Thank you for this information. I am about to retire and travel around the country, writing about my travels on my travel blog. Can I write off the cost of the RV as a legitimate expense?
Thanks!
Shawn
Hi Paul,
You have a pretty good case, but remember to document, document, document! Keep track of the miles and the days of use. If you’re only claiming the actual percentage of use, I think you’ve got a good case. Having your family use the RV is one thing, “entertaining clients” on the RV is different. And you’re only talking about your family. So, I’d go for it. But make sure your documentation is hard nosed accurate.
Hello-I live in Temecula and will soon be working in San Diego about 1 hour south with no traffic (1.5+ hours with traffic). I will be working long hours and will likely want to just stay at a campground near the office in San Diego 3-4 nights a week in a fifth wheel (soon to be purchased). My family would also use the fifth wheel at that campground for weekends on occasion and in the summer. I will be working out of the fifth wheel on weekends and in the summer. My question is can I deduct the percentage of the space and fifth wheel payment that I use it for when I stay overnight for work? I will be working on a commission basis in Real Estate. Thanks!