I am curious if there are any Hip Camp landowners out there? I am curious how you file and how you write off the cost to develop your site?

[dandjwoodenboards]

We set up a Hip Camp site. It cost us about $6,000-7,000 to build. We have brought in about $470 of rental income (not much, but still income). I'm wondering if we can offset our tax burden by writing off the money we spent to get the Hip Camp RV rental site moving.

[Vanessa A]

What did you build? Did you add water, electricity and sewer hookups or did you build a structure or bathroom facility or something else like a playground? Although for the most part, most improvements are in someway deductible as an expense, depreciation or start up cost, what you built or spent money on would determine how it was treated.  

Also, how it is treated could depend on the type of income it will be reported as.  Your hip camp rental would be similar to owning and renting an AirBnB.   So, if the property is rented an average of 7 days or less it is not considered rental activities or if you provide Substantial services, it is NOT considered rental income, instead it is considered self-employment income. 

If the average rental period is greater than 7 days and you do NOT provide substantial services, then it would be reported on Schedule E.  

 

[dandjwoodenboards]

We built an RV pad that we rent out to visitors.  I installed septic, water, and electricity (that added up to about $9,000).  The RV pad we created cost just shy of $7,000 (tractor work, tree removal, gravel, and extra dirt).

We only had reservations that resulted in 14 days of use (longest reservation being 3 days) and $470.  

We use the RV for ourselves as well, but I was wondering if...

• If we even have to report so little income?
• If so how do we also report the investment we put into it as well.
• We are also building a cottage with septic, electrical, water, gas.  We will probably use the cottage for AirBNB/Virbo when my wife's parents aren't visting.   That to will become a tax situation.

[SusanY1]

Rentals under 14 days for the year don't have to be reported on your tax return at all.  Since this is your first year in operation, I recommend using this allowable exclusion to simplify things for you this year. 

Next year, when you have more rental income, you can set up your investment in the property as an asset and begin to depreciate it to provide expenses to lower your taxable income on the rental of the space.