RV Tax Deduction Business Use – All You Need to Know

Are you an RV owner? Are you confused about which RV tax deductions you are eligible for? Drop all your worries right now. This article will give you details about RV tax deduction business use. You will also get to know the different aspects of tax deductions that you may qualify for. So, read along and discover the answers to all your RV-related tax queries.

RVs are not just vehicles. They represent a specific kind of lifestyle. Depending on the state you reside in and your conditions, if you own an RV, you might qualify for some amount of tax deductions. Here is all that you need to know about RV tax deductions. You will be thrilled to know that the recreational vehicle that you love and adore, can be used for decreasing your tax bill.

WHAT ARE THE DIFFERENT KINDS OF RV RENTALS FOR BUSINESS USE?

RESIDENTIAL RENTING: This implies splitting the RV for personal as well as rental use. Personal use refers to the use of the RV by its owner or any member of the owner’s family. It includes anyone who pays less than the fixed rental price of the RV.

RV rentals will only qualify for tax deductions if more than 50% of its total number of days are used up for business purposes. If you have not used it for more than 50% specifically for business use, you can depreciate your vehicle at the regular rate.

RENT FOR SHORTER DURATIONS: If you had rented out your RV for even less than 15 days in the entire year, you do not have to report the rental income that you earned. In this case, no rental expenses would be considered as deductions.

RV FOR ONLY BUSINESS USE: When you use your RV solely for business purpose, you qualify for RV tax deduction business use under section 179. This applies if you travel in your RV to reach clients and spent a night. In this case, you become eligible for a tax deduction under section 179 because here you use the RV only for business purpose. You also use the RV for staying overnight. So, that comes under transient lodging too.

RV FOR RENTAL USE: When you rent out your RV, you start earning a stable income and have expenses associated with the rental. This would make you eligible for a tax reduction under section 179. Here, your rental activities would qualify as a kind of business purpose.

A rental property will qualify as a business only when you do it to make an income and work at it systematically and regularly. This makes you eligible for the tax deduction under section 179 because your motor home is used as a transient lodging when the overall rental period throughout the entire year remains less than 30 days.

WHAT HAPPENS WHEN YOU USE RV FOR BUSINESS PURPOSES?

DEDUCTION FOR BUSINESS USE: If you are using your RV for running your business, you can qualify for RV tax deduction business use. You will be eligible for such deductions even if you rent out your RV when you do not require it for official purposes. However, you have to be very careful if you wish to claim this deduction.

To do this, you have to keep proper documentation of everything in which your vehicle is involved. Do not forget to make a note of the total miles you have traveled along with the income generated. If you have any other details regarding using your RV for business, remember to write them down too, so that you do not forget when the time comes for claiming the deductions. Also, include the time when your RV is used either for reaching to clients’ locations or for meetings.

In the case of RV tax deduction business use, the Internal Revenue Service has laid down particular and specific guidelines. This also includes the RV tax write off. Before you go to claim this tax deduction, ensure that 50% of the nights that you have spent in your RV, have been solely used for business purposes. Also, remember not to stay in your RV for more than 30 days at a stretch.

If you are confused about how to proceed with the claim of tax deduction, it is always recommended to take the help of a trained and experienced tax advisor. He or she would be the best person to guide you so that you can make use of the deduction to its fullest.

If you own a motorhome and not just merely an RV, you might be able to get the mileage expenses deducted from your total taxable amount. In 2018, the cost was 54.5 cents for a mile. In 2019, the cost had increased to 58 cents for a mile.

Before you claim these mileage deductions, make sure that the purpose of your travel is mentioned without any scope of confusion anywhere. Ensure that over 50% of the total miles that you cover, is used for business purposes. Only then will you be able to use your RV to get some tax deductions.

You have to remain extremely careful when you are documenting the total time that you have to spend in your RV for residential use and the time that you have used it for your business operations. If you are using your RV strictly for a business venture, it should then fall under the category of home-office deductions as fixed by the Internal Revenue Service, as a dedicated work area.

If you are not using your RV for business but using it for some recreational activities, then you might land up in a fix. Recreational or personal activities do not align with the rental guidelines provided by the Internal Revenue Service. If such a thing happens, you should immediately get in touch with a tax attorney before taking further steps.

WHAT ARE THE THINGS THAT YOU NEED TO KEEP IN MIND FOR RV TAX DEDUCTION BUSINESS USE?

RENTAL DEDUCTIONS: You are eligible for RV tax deduction business use if you rent out your RV for official or business purposes. You can use your RV smartly for pleasure and recreational activities as well as for business. However, you need to be extra careful when you are documenting for both these purposes.

You will have to give accurate and flawless documentation of your total rental income. You also need to show that half of the time that you have spent in your RV, has been for business purposes. Sometimes it may happen that due to some business or office related trip, you are not able to spend 30 consecutive days in your RV. Even under such a circumstance, it will qualify as a kind of business expense.

For this, you only have to make sure that you use the RV for at least 2 weeks or over 10% of the total number of days when it was rented out. If you fail to do this, you might end up losing the deduction related to a home mortgage.

Before proceeding, consult a tax attorney who would be able to guide you in the best manner. Also, do not forget to go through the renting residential property rules laid down by the Internal Revenue Service.

The next thing that you should never forget is that you cannot use the RV for entertainment purpose if you want to enjoy business-related tax deductions. Never host any business parties inside your RV. Entertainment facilities like bowling alleys, hunting lodges, swimming pools etc. will not be treated as tax deductibles. Keep the RV only for traveling and lodging. Avoid all sorts of entertainment and recreational activities.

Many RV owners try to claim RV tax deduction business use, but only some are finally able to get it. Any claim that you make regarding your RV as a business deduction will go through immense scrutiny. The Internal Revenue Service will audit it minutely before granting you the deduction. So, if you are interested in getting a good amount of tax deducted, make sure that you have done a good job in documenting all the business-related expenses. Also, hire a good tax representative and a trained accountant to assist you in the process.

DEPRECIATION: When you are using your RV for business purposes, you can expense a particular amount of depreciation on it. This can be done especially if you own a motorhome. Several tax experts say that, if you are not dealing with clients and do not use your RV except your business purposes, then depreciation might be a very easy write-off.

For many households, an RV is a major purchase, when compared to a car or a second property. While you should not ignore your tax payments, it is also wise to save some money by taking advantage of RV tax deduction business use. If you are an RV owner, this kind of tax deductions might make it easier for you to accommodate the RV kind of lifestyle within your budget.