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,
Thank you so much for your advice and support. I am so inspired to do this sooner than later.
I am a fan of Missouri, went to medical school in Kirksville, loved going down to St. Louis on wknds to study. It took me 5yrs undergrad (double major), 4yrs med school, and 4yrs psychiatry residency, and additional 2yrs for acupuncture. It’s time to clear some school debts 🙂
I am currently in CA, I am not familiar with how the business needs to be structured from the ground up (sole proprietor vs LLC vs what not) to ensure adequate liability protection. Would you be able to set this up or do I need someone licensed in CA?
Do I set this up with a business loan or purchase it under my name in regards to optimal deduction strategies?
Again, thank you for your insight, would love to meet you in MO when I am in town.
Luke
Hi Luke,
Wanna come to St. Louis? I think I’ve got some clients for you.
I think you’ve got a perfect use for the RV as a business expense. And, even if you’re running at a loss you have a valid expense with the RV because for you it’s not a vacation vehicle, you’re setting it up as a mobile medical unit. I love that idea.
Yes, deduct the RV, the maintenance, the gas, the whole works. It’s going to be a 100% business use vehicle. You’re all good.
And, I think you will be making a profit.sooner than you can imagine. But if not, I know some people say you have to make a profit within 3 years or it becomes a hobby. That’s not necessarily so. You have to show that you are a real business, know about the business, have a real business intent, etc. From your email I see that you are a psychiatrist – how many years of college did you need for that? I would think that your psychiatrist license and the ability to write prescriptions would validate your “knowledge of the business” requirement. I suspect you’ve got enough of the other points in your favor as well so I wouldn’t worry about the three year guideline quite so much.
Good luck with you business, I think you’ve got a great idea.
Hello Jan,
Thank you in advance for all the advice you’ve given to previous questions. I am a psychiatrist with additional expertise in acupuncture. I’d like to have a mobile medical unit that offers psychotherapy, medication management, as well as acupuncture to fully integrate the best eastern and western medicine has to offer.
My questions:
1. I imagine it will take me quite some time (years?) to build up this business with adequate clientele to sustain the business, will I be able to deduct the RV over 5yrs despite lack of profit in those years? What about thereafter?
2. What else can I deduct as part of this business? Vehicle service maintenance, gas used, cleaning, storage fees, etc?
Thank you.
Hi Matt,
Yes. Yes. And, yes.
The key here – and I think you’ve got it, is documentation. So for those extra buying miles and time you spent working on your antique business, I’d count that as business use. Any day you spent buying or visiting a dealer seems like a business day to me. And the mileage too. Any day that was purely for personal, well that was vacation. The great thing is, you’ll have the receipts and merchandise to prove the business purpose.
Hello:
We have 3 questions.
We have a travel trailer we use for both business and personal travel. We are in the antiques business and use it for lodging while on buying or delivery trips, or going to auctions and shows. We keep accurate records of mileage and use.
For 2014 (the year it was put in service) we used it 100% for business. We depreciated it for the portion of the year we had, it using the straight line method. For 2015, based upon the number of nights used, we will NOT use it more than 50% for business. In future years we likely will use it more than 50% for business.
Question 1.
Can we claim depreciation for year 2 (2015), using the straight line method, limited to the percentage used for business?
Question 2.
Can we claim, limited to the percentage used for business, deductions for expenses such as repairs, maintenance, registation, insurance, etc.?
Question 3.
During 2015 we took an extended trip PRIMARILY as a personal vacation. On the way both to and from the vacation area we used the travel as a buying trip – in some cases driving many additional miles and days to stop at shops and see dealers. We also drove additional miles and spent much time while in the vacation areas for buying purposes. Can we claim ANY portion of this trip?
Thank you.
Thanks Jan!
Hi Wendy S,
That’s a really good question. Your situation is a little different, most of your RV costs are personal use. You’re looking at only 10 nights a year of personal use. Can you deduct the cost of the hotel that you didn’t stay instead of the cost of the RV? No. Sorry.
You can deduct the mileage you spend driving to the craft show. (Or maybe the actual cost of driving down, that might be a better deduction for you.) You can deduct the cost of staying at the RV camp ground, and any costs associated with the business trip to the craft show. But you can’t deduct what you would have spent at hotel instead of staying in the RV. Sorry.
Hi Tom,
Let me go after the 179 deduction first. This is my opinion–so I’m thinking that if you ask somebody else you may get a different answer. I would consider an RV to be “listed property”. Automobiles are considered to be listed property, cameras, video equipment, things that would normally be considered “toys” are listed property. You cannot take a section 179 deduction on listed property.
I can see the reverse argument – it’s over 6,000 pounds so some accountants would not put it in the listed property category. But since an RV is already going to get extra scrutiny, I’m not inclined to 179 the deduction. (Like I said, that’s my opinion and I’m sure there are plenty of people who would disagree with me on that one.)
You can purchase the RV through the business, but you should talk to your insurance agent about that. It may cost less to buy it under your own name and just reimburse yourself for the business usage. That might be more of a cash flow argument than a taxation one.
While I would normally say you need to return home every 30 days, if you are not staying in one place for 30 days, then I would still be calling that transient lodging. But, if you live in Minnesota, and you’re doing business in in your RV in Galveston, Texas for 60 days straight–then you’ve lost the transient part of the home. That would be one of the keys to claiming the RV as transient housing. But, if you were to spend a week in Galveston, a week, in Norman, OK, an week in Denver, etc….then I think you may have a case there. Although, don’t you normally return home at least once every 30 days to see your family? You could still fly home instead of staying in a hotel. Just a thought.
Now, if you take the family along on a trip, that’s personal use. You would reduce the percentage of business use accordingly.
Most importantly, keep good records. I think that’s what it’s all about. Be able to document everything you do to make an RV deduction.
How can I deduct a portion of an RV used for business use? I am a crafts person and travel 3 times per year to craft shows. rather than staying in a hotel can I deduct those nights as an expense in an RV? Other than that most of the RV is personal use, so say I’m at a craft show 10 nights per year, rather that staying in a hotel at $1200 can I deduct $1200 off on line 24a?
Hi Jan–
I am a self-employed consultant (LLC, taxed as S Corp) who teaches at educational seminars for doctors and visits their offices to help them with their business. This typically involves a lot of travel and since my business is growing, I am considering purchasing an RV instead of practically living out of hotels and in airplanes. (1) Can I purchase through the business with a Sec 179 deduction or do I have to purchase it personal and somehow rent it to my business? (2) Do I need to limit my trips and return home every 30 days or just not use the RV for a few days (stay in a hotel) to meet the transient requirement? Seems like a tough thing to return all the way home if I’m across the country! (3) If I take family along, do we just reduce percentage of business use and declare that portion of the trip personal or should I never mix the two? Thank you for your time and assistance?
Hi Bob,
So you don’t have any overnights, but I do like the idea of using the RV as a portable office. (Actually, I’m really loving that idea.)
Like everybody else, you’d need to keep really good records. Don’t entertain in the RV, and document how much was business versus personal use. I think you’d have a really good argument, especially if the IRS were to “visit” your portable office and saw that it really was decked out as an office.
What if I use the RV as a portable office? I sell to many individuals who cannot make it to my office. What if any could I deduct? No over night stays for business. Any difference if the Business owns the RV?
Hi Tim,
Your RV wouldn’t be for business travel, it would be your second home. You would be able to deduct you RV interest payments the same way you would deduct a mortgage on your schedule A. When you use it as a hotel, you’ve got that 30 day limit on there.
Also, it sounds to me like you’ve permanently moved to Utah. I don’t think you can deduct your hotel time in Utah as a temporary business expense.
You might want to sit down with a Utah tax professional to make sure, but you’re sounding like a Utah resident to me.
Hi Jeff,
You would need to purchase new for the Section 179 deduction, but you can depreciate. What you’ve done is convert “personal use” property to “business use” property.
Make sure you keep good records to back up your claims. Only depreciate the business use percentage.
Hi Jan,
My wife and I are truck drivers. We own a home and work for a company in Georgia. We have decided to become owner/operators of our own truck and lease on to a company in Utah. All loads leave from and return back to Utah. Our routes would rarely have us back in Georgia for any off time, (our adult son would continue to live in the home) We will be back in Utah about one to two days a week, then back on the road. We would also be taking our off time in Utah most of the time (about 7-10 days off after about 12 weeks working) We know we could deduct hotel expenses between trips since we’re away from home. Our question is if we purchase a 5th wheel and place it in a campground, what could be deducted as far as lot rent, power, rv payments, interest, maintenance?
Thank You
Hi Jan,
I work for a company that requires weekly travel. I often use my class b motorhome which I purchased in 2014 prior to taking this job in April 2015. If I travel for business and stay in the rv for business can I take depreciation deductions on my personal income tax? Somewhere I read that the unit has to be purchased new in the year it is put in service to qualify. Is that true?
Jeff
Hi Irene,
I’m afraid that since your husband has already been working for the company, and he’s going to be working at that location for another 5 years, you won’t be able to write the RV rental space off as a “temporary living expense.” It would be different if he was traveling to different sites, but it’s always the same place you you lose the temporary housing part of that deduction. I’m sorry about that.
But, you can deduct the mortgage payment on your Schedule A as a second home. So you’ve at least got that going for you.
My husband works for an oil company in Texas that relocated 85 miles from our home. He now leaves on Monday morning and stays in our motorhome till Thursday when he comes back home. He will be doing this for another 5 years till he retires. Can we deduct the rental and utility fees paid at the rv park? Also, what can we deduct as far as the motorhome? We are still paying on it.
Hi Jessica,
Since your family will be using the RV for vacations, your husband will not be able to claim 100% of the RV expenses as a business deduction. Make sure that he keeps really good records about how much he does use it for business and only deduct that portion.
Hi Jan,
My husband and I are looking into purchasing a RV. He is a construction worker, and works out of town. He usually leaves on Sundays and returns home on Thursday night. If he uses the RV instead of staying in hotels every week would we be able to deduct it 100%? Also would we be able to use it to take our family camping once or twice a year? Thanks, Jessica
Hi Bethany,
I did some thinking about your case. I’m thinking your RV is your main home. So I would depreciate, and deduct, your 10% of your RV expenses as your home office expense. This is a little different than what I’ve been saying to other people, but I think this really works for you.
For one thing–it’s true. And that’s hard to beat. Also, you can still deduct your remaining mortgage interest on the RV on your schedule A if you itemize any other deductions.
Additionally, I think you should keep a log of your mileage to your different job locations. You may find that you can claim some additional expenses when you take the business use miles into account. You may have to play with that a bit to see what makes for a better deduction there. Your accountant will be able to figure that if you have really careful records.
So you’re really tracking two different uses for your RV–one for the home office and the other as a mode of transportation.
Hi Jay,
It sounds like you could claim your mother as a dependent on your US tax return for 2014. It sounds to me like you provided more than 50% of her support
I don’t know if it makes sense to apply for US residency for your father in law or not. That’s a pretty personal decision, but you shouldn’t make it on the basis of income taxes–the tax benefit isn’t all that great. Does he want to be a US resident? What’s in his heart is what’s important there.
Hi Roger,
That’s a really good question. And here’s the link to the court case for anyone who’s interested: http://www.ustaxcourt.gov/InOpHistoric/jacksonmemo.wherry.TCM.WPD.pdf
Now, the bit where it says watching TV constitutes personal use is a bit disturbing, but in this case, the couple had claimed 100% business use of their RV. That’s a big deal, you can’t entertain in your RV if you’re writing it off for business.
I believe that if you’re using your RV for business lodging, and you happen to watch a little TV–just like you would in a hotel, you could still claim your expenses.
I think where the Jackson’s really messed up was that they couldn’t substantiate any of their business use for 2006 (although they substantiated 66% use in 2007). But still, they were no where near the 100% use they had claimed on their return.
So I think the real lesson from this case is you had better substantiate your business use of the RV, and don’t over-claim your deductions.
I am interested in deducting my motorhome while on business, but I am concerned by a recent tax case that brought to light IRC 280A. The court ruled in favor of the IRS claiming that they did have adequate business records to claim the motorhome as business, however personal use of a dwelling unit negated the deduction. they cited that watching TV could have been considered personal in nature and the courts disallowed the deduction. The court case is T.C. Memo. 2014-160. Does this screw up being able to take the mortorhome as a deduction?
Greetings Jan, thanks for being so willing to answer questions! We purchased a Travel trailer and pickup truck (both used) late last year, and went on the road full time in late December. we will be working freelance, full time, as we travel … as artists and handy-folks. I’m just getting around to doing 2014 taxes, and can’t figure out what asset type to call the Travel Trailer when I list it for depreciation purposes …my current choice is Other Asset but really have no idea. I’m planning on deducting a percentage of it as office space, and put down that its business use percent is 10% but am not sure that’s how I’m supposed to do it. We store tools and art supplies in it, live in it, design projects in it, and drive it from job to job. I expect to be doing this for the next 2 years or so. Any help on how to get it set up really appreciated, thank you!
Hi Jeremiah,
It sounds to me like you’ve got a pretty good case for deducting your RV expenses. The main thing about deducting temporary lodging is that you’re not in one place for more than one year.
But, here’s something to consider–what is your “tax home” going to be. If you’re moving around the country month to month–where are you claiming your home to be?
The reason I’m asking is because if you don’t have a “tax home” then you’re filing part year returns for a bunch of different states. Where really, I’m thinking you should be filing non-resident returns for various states.
And although your kids might be really young right now, when they’re old enough, where are they going to go to school? They can’t be traveling around in an RV for their whole life. (Although I guess you could home school.)
Just some things to think about.
And about the food–if you really are temporarily at all those locations, you may deduct the cost of your food. (Of course, not the family’s.)
Hi!
I am contemplating taking a job that will take me all across the country as a sales person. I am considering moving my family into an RV full time, as the travel required will be constant. I would essentially drive the RV (probably a 5th wheel) to a location, live for a month and visit all of my potential and existing clients. The RV would be our home, but also a requirement for the job. I would start as a 1099 contractor, but would morph into an actual employee (and eventually have a max of 1.5% equity in the company).
Would the cost of my travel expenses be deductible? What about food? I get that it would not be deductible for my family.
Hi Jacolyn,
I use the IRS CLADR table: http://www.irs.gov/publications/p946/13081f31.html
Hi Lisa,
I would use the same criteria on the Casita as you would an RV. Are you using if only for business? If not, then what proportion of it is business?
Hi Deborah,
If you qualify to use per diem expenses and it’s better for you, then do it.
are you depreciation the RV over 5 years? What is the authority? Thanks!
Hi Jan,
I am an Equine Massage therapist (yes horses get sore too:), and I travel to different events in my state and other states occasionally for competitions. Last fall I bought a small trailer (Casita) to take to these events this year to stay in instead of camping or hotels. My question is “can I deduct any of the cost of the trailer or registration from the sale”? I have not used it yet, but when I do, what exactly can I use as a business expense besides miles?
Thank you.
Lisa
If a construction worker has an RV he lives in while on the jobsite does he still qualify for the daily government per diem? We would like to take the per diem and not the actual expenses.
If a construction worker has an RV he lives in while on the jobsite does he still qualify for the daily government per diem? Daily per diem would be more than actual cost of rental space and etc. We want to take the per diem instead of actual expenses.
Hi Rick,
So lets say the space was $500. So you got a 1099 for $500 which was the value of the space. But you had to be in that space to work there So yes, I would write off the space as an expense.
But, if you are not reporting that $500 income for the space, then you cannot claim the cost of the space as a deduction. I just wanted to make that clear.
Hi Adam,
You will be able to claim all of those expenses against the income you earned on your RV rental income. Where you could have an issue is–because of your high income range, if you were to have a loss on your RV rental income, that wouldn’t be deductible because you are “phased out” of claiming a loss on any passive income you have.
But, any expenses you have against the RV income, you can write off and you should.
I worked as a workamper for a season last year and into this year, because I actually worked for a space I otherwise would have had to pay for, can I claim that as
an expense equal to the so called pay?
I had someone else tell me they filed as self employed, and did it just that way, the pay equaled the expense. so as it was not viewed as income.
Thanks
Hi Bill,
I can’t think of a good reason why you couldn’t either.
Hi A.D.
Thanks. I’m not sure how knowledgeable I am on this one. Let me see. You want to buy an RV and then bill your clients for your hotel expenses. I’m just making up some numbers here.
So you bill your clients $1000 a week for your hotel–whatever you charge, it really can’t be more than what they’re already paying. You claim that $1000 as ordinary income because it’s a hotel (unlike an apartment which would be rent.)
Then you write off the expenses, of course.
So, you could do that. Or, you could just bill your clients directly for your expense of staying in the RV. Either way, you’d be paying taxes based on ordinary income, so I’m not seeing any advantage to setting up a separate LLC for the “hotel” business.
Jan,
I placed my personal use 2014 Class C Motorhome(purchased new June 17 2013) in a managed rental program Feb 15th 2014-Dec 31 2014. The unit rented for 205 total days and grossed $43,192.82 in revenue before Mgmt fee, expenses and operation costs. I was given a 1099-MISC from the mgmt firm with box 1 “Rents” totaling $21,596.38. I had maint, insurance, credit card charges, and loan payments totaling $15,683.96
I earn income as an employee of a commodities brokerage firm. My income before adjustments will be $258,866.66 my wife is a stay at home mom.
Will i be able to deduct any of my mgmt fees, operation cost and depreciation on my income?
Hi Jan, My wife and I own a Bed and Breakfast. We currently rent out three bedrooms and a Cabin out by the pond as part of the business. Because of the number of clients we have had to turn away in the past. We were thinking we could purchase a Class A Motorhome and use that as part of the business. Maybe using it for personal use only ten days per year. Keeping good records and still be able to depreciate it at the end of the year. Would we be able to us part of the cost as Section 179 depreciation the first year. I have done research but can’t find a good reason why not
Hi Jan, you are unbelievably knowledgable!
I work in a business that requires a lot of travel. I usually stay a few months but up to a year in each city that I travel to. I am a private contractor and get reimbursed from my clients for my hotel room charges… I probably stay in a hotel over 200 nights a year. My idea is to buy an RV through an LLC that I own, use it as a hotel, and bill my clients weekly for lodging expenses. Since they are spending that money anyway, I see this as a way to put that money in my pocket instead of a big hotel chain. Can you give me some bullet points of what I need to consider in this scenario. I know a lot of people that will be interested in your answer! Thank you!
Hi Alan,
Congratulations on your certification, that’s pretty awesome!
Mileage incurred traveling to and from disaster sites would be counted as personal use toward the 50% rule. So you’ll have the think about that. But, any RV expenses traveling to and from disaster sites would count as a charitable deduction. (I’m assuming that you’re volunteering to work disaster sites for the Red Cross or some other relief agency right?)
Of course, if you were paid for your disaster work–then it would be a business use.
I recently became a certified volunteer disaster relief responder. This allows me access to assist in relief efforts at federal disaster sites. I also have an S corp business that may allow me to meet the 50% business travel criteria for allowable RV expenses.
Q: Would the mileage incurred traveling to/from disaster sites be counted as personal use toward the 50% rule?
Q: Would any RV expenses traveling to/from disaster sites be considered a charitable deduction on my personal income tax return?
Thanks.
Hi Rex,
I hadn’t thought of that. I’m not finding anything that says you need to stay at home for any length of time. I think you just need to come home every thirty days.
Hi Joanie,
So my first question is–does your husband get paid W2 wages? I’m thinking he does. That seriously reduces how much you get to deduct–but that doesn’t mean you can’t claim the expenses, it just means the deduction isn’t as good as if he owned his own business.
Now here’s the other part–is this a permanent job? Is he expected to work at the refinery for more than one year? If yes, then there’s not going to be a deduction for him because he’s going to have a new tax home–which will be the location of the refinery.
Now, if the refinery job is expected to last for less than a year, that changes everything. Then his travel, lodging, meals, etc. will all be deductible.
Does this seem fair? No, but that’s the way the IRS rules work.
Bottom line–how long is he expected to be at that refinery? If they are going to move him to a different one later–even though he’s working for the same company, if he moves locations, that counts as being temporary.
Sorry, I don’t mean to make this complicated. This is just one of those confusing tax areas.
Ms. Roberg,
Thanks for this helpful information. I came across it at just the right time. How long does one have to stationary before returning the the RV?
Thanks again,
Rex
Hi
I have a couple questions about a 5th wheel my husband bought. First of all he purchased the 5th wheel after he was offered a job at a refinery a few hours from our home. He purchased the 5th wheel to live in during the week while he works and returns home on weekends. What can we deduct as far as the purchase of the 5th wheel? Also can we deduct gas, meals, etc. that he spends on going to work from home, and meals he buys during the week ? Im new to this 5th wheel thing so any information is greatly appreciated!
Thanks
Joanie
Hi Linda N,
It sounds to me like yes, you can depreciate your trailer over the 5 years. You can also write off the taxes, tags, lot fees and utility fees. I would count those all as business travel expenses. I think you’re a perfect example of using the trailer for business use living expenses.
Thank you so much for taking the time to answer all these questions! I’m glad someone actually understands the ins and outs of the IRS.
I’ve seen some answers that sort of pertain to me but not completely so here’s a straight-forward (I hope) question:
I have a home in California. I work in other locations all year. I live in a travel trailer while working. The trailer is not used for anything but my jobs. No personal use. I bought the trailer just for work.
I go home every 30 days.
The trailer is paid for – no interest to write off. I pay taxes, tags, lot fees & sometimes utility fees.
Can I depreciate the purchase price of this trailer over 5 years? If not, what can I write off?