We started renting out our RV through RV share. Can I claim this as a business? What paperwork do I need? and what can I write off?

[AmandaR1]

You can add it as a Rental or as a Business and you choose based on Active Participation (explained next). There's no specific paper work that you must have, but you should keep all documents related to the cost of the RV, income payments received and receipts for the expenses you paid. 

You should also keep a record of all income and expenses in one place (such as a spreadsheet, notebook or accounting software).

If you are doing minimal work related to renting it (like a standard rental property), then you should report it as a rental, which is a passive activity. If you are including extra services with the rental, then you should report it as a business. For example, airport pickup, bed and breakfast, etc. 

You'll need the Premier edition of TurboTax for a Rental or the Self-employed edition for a Business. 

In either case, you can write-off all costs associated with renting it (things you wouldn't be paying, but for the purpose of having and renting the RV). The software will guide you through your expenses in whichever section you choose. 

To add your RV income and expenses:

1. Login and click Take me to my return
2. On the left menu, under 2017 Taxes, select the Federal 
3. Select the Income and Expenses tab along the top. To get to the full listing of Income and Expenses you may be asked to, "select options that apply to you," click Continue and then Check for more tax breaks, then See list of all tax breaks
4. Scroll down to Business income and expenses to add your RV activity as a business or Rental Properties and Royalties to add your RV activity as a rental
5. In either case, the software will be talking about your HOME or BUSINESS and you can replace these terms with RV. Once you've added the preliminary information, you'll come to a summary screen. From there: 

• you can add your RV as an ASSET, which will allow you to take depreciation expense each year. 
• You can enter your income as General income. 
• Then, go through all the expenses and the software will guide you through everything you may have spent. 

[tjwdsw]

I have a couple questions about this.  When I add my RV as an asset, I chose the Tools, Machinery, Equipment & Furniture option to describe my asset.  Is that correct?  Because in the end it tells me it will be depreciated over 7 years, and another TT answer about this topic says the RV is a business asset depreciated over 5 years.  

Also, if I enter the RV as an asset, do I also claim vehicle expenses and include all of the mileage my renters drive?

[grlasnier]

I have the same question as you concerning treatment of the RV asset.  It seems ludicrous that you would depreciate it over 5 years when the useful life of an RV is perhaps 15 to 20 years.  Doing it over 5 years, especially for a new RV,  would generate a huge rental loss, one that you could not apply against other taxable income.  

I don't think you can take mileage as well as depreciation.  Mileage is designed to cover all costs of running a vehicle, including gas and maintenance and depreciation.  Normally, the renter pays for the gas.  Also, an RV is a moving house, and the federal mileage rate is not designed to recoup the full cost of operating and maintaining an RV.  

It would be great if we could hear from someone who has experience with this, such as a tax professional doing returns of RV owners who rent their RV's and use them as second homes.

[KrisD15]

If you used the RV in your business, such as driving tour groups, using the Standard Mileage rate might make sense, but not when you are renting the RV. Yes, the IRS gives RV's a "depreciatable" life of 5 years. 

If you are not able to take the full loss in a year, the loss is carried-forward until you can. 

[stewy]

I'm also renting my RV. I converted this RV from a used van myself, it was basically valueless when I bought it, and after a L-O-T of work now rents pretty well for $150/night.

After gaining some experiences with real world maintenance costs I sat down and did an estimated cost per mile so I'd know what to charge long distance renters.

It came out to around .35 / mile.  Which also happens to be about what you'd get if you subtracted the fuel costs from the Federal rate of .55 / mile.

(Estimated depreciation, tires, oil, fluids, brakes, expected life and costs of engine, transmission, etc, plus my experiential real world of how often does it breaks down and needs $1500 thrown at it)

So, I was planning to use $.35 / mile as a "cost".  I'm I wrong to do that?  5 year depreciation doesn't really reflect that driving it further costs me more money. (it does, almost every trip over 3k miles has needed mechanical attention, only one short trip 500 miles needed something anything)   Ideally, I'll be renting this vehicle long past 5 years, at which point I'll still be putting money into it roughly proportional to the miles being put on it.

I don't have significant itemized expenses, at least not on the order of the mileage amount.

Some particulars:

in 2019 I had about 6,000 rental miles put on it.

in 2020 it will be about 25,000 rental miles.

Interestingly, that's on income of about ~$6k in 2019 and probably ~$25k in 2020.

Edit:  Oh I see, you can't just put in a "custom" lower mileage rate of $.35 / mile.  It's just always $.58.

Could I put in 60% of my actual 6,000 miles and write a little note on the tax form explaining what I'm doing? (.35/.58) is 60% Or does the IRS not work like that?

Could I put in an "other expense" of .35*6000 = $2,100? And explain it somehow also in a note?

Or am I asking for trouble and I should just basically forgo the deduction. Not the end of the world, it's $1000 in 2019, but probably $4,000+ in 2020.

[DianeW777]

No, determining your own cost analysis for mileage is not the correct way to utilize all of your expenses for the RV you are renting out.   The original costs to restore the RV to an asset up to the date it was placed in service for rental use becomes the cost basis for depreciation and as you noted the cost recover period for depreciated is five years.

Once it has been placed in service any repairs are allowed to be deducted each year as well as any fuel, insurance and other expenses related to the rental.  

If there are capital improvements, which is determined based on whether those improvements have more than a one year useful life (will they last more than one year), this becomes a new asset with a new five year cost recovery for depreciation. All other repairs that will not last more than one year are directly deductible expenses each year.   You must keep your receipts for all the expenses that are ordinary and necessary to keep the RV available for rent.  All expenses will be deductible in the year paid with the exceptions of capital assets described above.  

Whether this should be reported on Schedule C (sole proprietorship) or Schedule E (rental activity) depends on the definition of 'Dwelling unit" as described in IRS Publication 527, page 17. Dwelling unit. A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. It also includes all structures or other property belonging to the dwelling unit. A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities.

[stewy]

That's a very helpful answer, thank you.

I think my RV meets the definition of a dwelling unit as it has a bed, stove, sink, shower and I use it when it's not out for rent. So I think it should probably be on schedule E, not C.

I tried putting it into TurboTax as another property. I filled out plenty of mostly nonsensical properties like property address, land value, mortgage points, etc with "0"s.

However, the trouble I get to is that at the end it gives me 27.5 year depreciation.

How can I specify that it's an RV to TurboTax somehow to get the 5 year depreciation?

[MarilynG1]

@stewy  In the Assets section, don't choose 'Residential Property', but instead 'Tools, Machinery, etc.' then 'Trailers and trailer-mounted containers' which defaults to a 5-year depreciation.

If 2019 was the first year you used it for business, you probably would have qualified for the Special Depreciation Allowance of your total Cost Basis in the RV. 

Click this link for more info on Business Assets.  

[KarenBnt]

Old post. But I am hoping I can help others with the information that I found. It took me a while to figure it out. You can take depreciation, interest, property taxes, cleaning, and advertising fees. There is a vacation home rule. You need to know how many days you used your RV personally and based on the number of days, you can write off your rental RV ( partially or fully). If you used your RV personally for less than 14 days, then you can deduct the whole RV. If is used your RV personally for more than 14 days, then you will need to prorate your personal and business expenses.

 Section 280A

CPA Blog

[BIGAl34]

How do taxes apply when I rent out/ manage an RV that is owned by a friend?  I do all the work to rent out their RV and split the profit with them?  How do I report this and what are their tax responsibilities for the passive income they make?  What about upgrade and maintenance cost.  If they pay for the maintenance or upgrade cost and I do the work to fix or install them, how does that all pan out?

[Vanessa A]

You would need to file a Schedule C to report your income from managing your friends RV.  TurboTax Self-Employed will walk you through the steps of entering your income and expenses for this business income. 

They would need to report this using Schedule E as investment income using TurboTax Premier. Yes, they will be able to deduct the maintenance and upgrade costs. 

Whatever they spend, they will include on their return along with half of the gross proceeds.  

You will report your half of the gross proceeds, then enter your expenses, if any as you walk through the self employed interview.

[BIGAl34]

Good information!  Can they take the 5 year RV depreciation on their taxes as well?

[BIGAl34]

Do I only pay taxes on my half of the gross revenue if we split all profits 50/50?

[Vanessa A]

Yes, your taxes have nothing to do with theirs.  It doesn't sound like you have an LLC or S Corp set up, so you will only pay taxes on the amount you claim.  They will pay taxes on their profits. 

Yes, they can depreciate the RV over 5 years.