Experience in using RV as a business expense

[sasteel]

My wife and I are considering purchasing a Class A diesel pusher and would like to take advantage of any tax breaks out there for doing so.? She is a travel nurse and typically takes a 90 day rotation in an area of the country in need for her expertise.? The agencies that serve to coordinate contracts pay a housing allowance which we could use toward the purchase/maintenance/site rental.? We are about 5 years away from retirement at which time we would like to spend much of our time traveling in the RV.? Surely someone out there has had this same idea and I would be interested in knowing how it has turned out.

Scott Steel
Springville, TN

 

[Tom]

Interest on the purchase of an RV can be tax deductible if the RV meets the IRS definition of a second home (facilities for cooking, eating, sleeping and U-know-what). But be sure to check with your tax advisor.

 

[sasteel]

I have been told that the interest on the purchase can be written off and to deduct expenses my wife must be working at least 100 miles away from our home.  What I'm wondering is if anyone knows if you can depreciate an RV as a business asset.  I know that I will ultimately have to check it out with my CPA but thought I'd see if anyone on the forum has done anything like this, and whether it has worked out.

Scott Steel
Springville, TN

 

[Tom]

Scott, I guess I'll have to let someone else answer the question.

 

[Bob Buchanan]

Hello Scott:

>>  What I'm wondering is if anyone knows if you can depreciate an RV as a business asset.
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Having read your situation, I wouldn't try it -- sounds like a red flag item.

I live and work full time in my RV -- vs. using it part time for a business project. As such, I treat the MH as a home based business for tax purposes exactly as one would treat an office in the home for a full time business. I don't go to work somewhere and come home to my MH each night - and then claim that extra extra office in the home. I occasionally teach, but do not have an office at any of the schools.

The calculation that I chuckle over is the percent of the total square feet that I use for my business. I list 8x30 sq-ft as the total which has never been questioned -- but must seem strange to an IRS tax form reviewer. The fact that it is a MH is not mentioned on the tax form. However, that percentage is what I use on my Schedule C. I decided not to take depreciation on the MH as part of that percentage -- but if I needed it, I would do it.

But again, I would go along with Tom's advice and ask your adviser -- tho I would bet she/he would caution against it. My thought is that you would have a tough time with the "exclusive use" clause both on depreciation and interest.

 

[BernieD]

Interest on the purchase of an RV can be tax deductible if the RV meets the IRS definition of a second home (facilities for cooking, eating, sleeping and U-know-what). But be sure to check with your tax advisor.

You are also limited to the interest deduction on 2 qualified homes. If you owned a regular home, a cabin in the woods or on the  shore and a qualified RV, you could only deduct mortgage interest on 2 of the 3.

 

[blueblood]

My wife and I are considering purchasing a Class A diesel pusher and would like to take advantage of any tax breaks out there for doing so.? She is a travel nurse and typically takes a 90 day rotation in an area of the country in need for her expertise.? The agencies that serve to coordinate contracts pay a housing allowance which we could use toward the purchase/maintenance/site rental.? We are about 5 years away from retirement at which time we would like to spend much of our time traveling in the RV.? Surely someone out there has had this same idea and I would be interested in knowing how it has turned out.

Scott Steel
Springville, TN

Ask a small business tax adviser, to consider setting up a corporation for employing your wife and buying the RV for her to travel to'from work, carrying her tools of trade, as an office and on site living quarters, etc.?


Here's a Q/A that I found on a web search which referred back to a 2002 Trailer Life artice.

Q: We follow the craft-show circuit, selling jewelry and other handmade items. We might work in 20 or more states during a calendar year Do we have to file tax forms in every state where we work? Does this mean paying tax on the income more than once? What travel and RV expenses can we deduct?

A: Many states consider the source of income to be where the services are performed. Even as a nonresident, you may be required to file in any state in which you performed services or earned money. Your home state (or the state of your tax home) may consider all of the income earned by you as taxable, no matter where it was earned. However, most states have a reciprocity agreement so that you will pay taxes only once on the income received in each state. In your home state, you usually can apply for credit on taxes paid to other states. With 50 sets of state laws (plus Washington, D.C.), it is best to consult with your tax professional before preparing your state taxes. It also is imperative that you maintain accurate records.

When traveling away from your tax home and earning income in various locations, deductibility of travel and RV-- maintenance expenses may be justified if your vehicle is used in your business. There are two ways to determine allowable business expenses. You may deduct either the actual costs involved in the operation of your unit, including fuel, maintenance and depreciation, for the percentage of business miles driven, or you may multiply the standard mileage rate allowable for the actual business miles. Since this rate is determined for the average automobile, RV owners usually are better off taling actual expenses. However, only that percentage of the actual costs as compared to overall costs maybe deducted. Forinstance, en route to your next business site, you decide to take a side trip to visit relatives or for pleasure. That part of your expenses may not be deducted. If using standard mileage, the miles for personal use are not deductible.

The same rule of deducting only business expenses applies to RV park fees. Other expenses you may deduct fall under the category of "away from home" costs, which is a standard meal-- and-incidentals allowance. This is a predetermined deduction that applies only to those days when you are engaged in business, and may be taken no matter how much you might spend on groceries or restaurant meals.

The amount of this deduction depends on where you are traveling. For most parts of the country, you may deduct $34 per day. In areas of the country where living expenses are higher such as New York or Los Angeles, the deductible per-diem amount is $42. For exact locations and figures, refer to IRS Publication 463. This deduction requires maintaining very accurate records as to where you are located every day that you claim a deduction.

If you are a full-timer and have no actual home where you reside part of the year, you are considered a transient and therefore have no home base. Your tax home is wherever you work. In this instance, you may not deduct your travel or away-from-home expenses since you are never considered to be away from home. You will still have to pay taxes on income derived for those states where you do business and a file a Schedule C (Profit or Loss from Business) with the IRS, but without an address or an actual place of residence, only expenses directly related to your business are deductible.

 

[sasteel]

Thanks, that sheds quite a bit of light on the subject.  I think setting up the corp will probably work.  When she is at a location, she is typically there for a 3 month stretch and essentially 100% of the rv expenses should be work related.  We have a permanent home in TN.  If I come out and visit and we take the rv for non business travel that obviously won't be deductible.  If I understand you correctly, I should be able to deduct actual expenses (with receipts) in full when we move from one location to another.  I will take your advice to my CPA and ask him if he feels knowledgable enough to set up what is needed, or not, recommend someone who is/can.

Scott Steel
Springville, TN