First you must establish the business use percentage of the vehicle. A vehicle is called 'Listed Property'. Generally, a vehicle is not exclusively used for your vacation rental, but would also have personal mileage which would not be allowed to be deducted. A record of your business miles divided by the total miles driven in a year would provide your business use percentage.
If that business use percentage is greater than 50% (51% or higher) then you can choose to use special depreciation if you chooses. This is simply a law that allows you to take a large depreciation expense in the first year an asset is placed in service and, yes, there would be little or no deduction in future years is you choose 100% special bonus depreciation.
IRS Publication 946 (Click the link for more information)
You can take a special depreciation allowance to recover part of the cost of qualified property (defined next) placed in service during the tax year. The allowance applies only for the first year you place the property in service. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service.
- Exception: Property required to be depreciated under the Alternative Depreciation System (ADS). This includes listed property used 50% or less in a qualified business use.
If the business use is 51% or more in 2022, then you would be allowed this option, as well as Section 179, however if the business use drops to 50% or later in the first five years then you must recover any excess depreciation allowed at that time.
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