Hello,
September 2022, I purchased an RV (travel trailer) with the intent of starting a rental side business by renting it out on Outdoorsy. I took out a loan for the RV and paid a down payment. I purchased over $1,000 worth of items that are required for the rental business and that will conceivably last longer than a year (leveling chocks, hitch locks, sewer hoses, power cables, dishes, bedding, and other niceties for our guests). We did not get any renters in 2022, because it was already late in the year, and we did not earn any money. We used the RV personally for two nights, and I spent a whole day towing the RV up to camp sites to take photos and video to create an instructional video, and prepare the Outdoorsy listing. I estimate that one-third of the use of the RV last year was for business use (counting it as one "night" towing it up to camp, making the renter instructional video), and the other two-thirds of the use of the RV was personal use (the two nights we used it for personal use).
I need some help getting this entered into TurboTax and properly.
Questions:
- When adding the RV trailer as a capital asset, I selected "Tools, Machinery, Equipment, Furniture -> Trailers and trailer-mounted containers" and then selected "I have not always used this item 100% of the time for this business" and entered 33.3% business use. Is this correct?
- The depreciation amount is very small for 2022 (like $500). Is that just because it was placed into service as a business asset later in the year? Will future year depreciation amounts be larger given an entire year of service? (Note: I chose to NOT take the special one-time bonus depreciation because we may end up selling the trailer after 2 years or so to keep our rental RV new. Was that a good move?)
- How should I enter deductions for the $1,000+ worth of purchased equipment? As "supplies" or "assets"? Could these qualify as "De Minimis Safe Harbor Election" since all items were under $2,500, thereby allowing me to write them off as expenses one time?
- Do all of my deductions need to be multiplied by 33.3% (deducting only the one-third business use of the RV in 2022 for depreciation), or can I deduct 100% of my non-capital depreciation expenses? (the $1,000+ worth of required equipment like leveling chocks, hitch lock, sewer hoses, power cables, dishes, bedding)
- Can I deduct RV insurance? (If so, only 33.3% or 100%?)
- Can I deduct the interest I pay on the RV loan? (If so, only 33.3% or 100%?)
- Since we didn't have any income for our business in 2022, do I just enter $0 in the income section? (even though I did that, TT is still saying "You haven’t entered any income for this work yet.")
I know that is a lot. Feel free to answer only the questions you feel like answering. Thank you in advance to any who contribute!
