I bought a motorhome and rent it to a business as a dwelling and office. It is stationary at one address. What Type of Asset & Asset Class should I use for depreciation?

[crmadden]

Schedule E states, "For vehicles, use the Car and Truck Expenses Worksheet" but since this is being used as a dwelling, it does not appear to apply. Residential and nonresidential real estate could beg an audit question about "real estate".  The Asset Class & Recovery Period for real estate is longer than one would assume for a motorhome. Choosing "Other" as "type of Asset" comes with a warning from TT not to use it unless you are very familiar with depreciation.  It generates the question of which "Depreciation Method" to use. 

[Cattlerancher · Accepted solution]

I would use these guide lines for a recovery period that I have found in the IRS publication 225 for farms. I'm aware you are not a farm but I believe the situation is similar to yours. I would not use the Vehicle Expense section. Instead, I would enter it under the Asset/Depreciation section. You can obtain this recovery period (7yr, 200/DB, HY) in the Rental Property (schedule E) by using the preselected asset category choices. When you are entering the motorhome in the Asset/Depreciation section select "Tools, Machinery, Equipment, Furniture" then "General Purpose Tools, Machinery and Equipment". This will give you 7yr, 200D/B, HY.

From IRS Publication 225, page 42;

https://www.irs.gov/pub/irs-pdf/p225.pdf

House trailers for farm laborers.

To depreciate a house trailer you supply as housing for those who work on your farm, use one of the following recovery periods if the house trailer is mobile (it has wheels and a history of movement).

A 7­year recovery period under GDS.

A 10­year recovery period under ADS.

However, if the house trailer is not mobile (its wheels have been removed and permanent utilities and pipes attached to it), use one of the following recovery periods.

A 20­year recovery period under GDS.

A 25­year recovery period under ADS.

[crmadden]

This looks both logical and defendable. I would feel comfortable presenting this to a judge at a US Tax Court. Thank you VERY much for taking the time to respond!