Thinking of taking a trip away from your motorhome or RV? Plan on renting it out while you are gone. Keep these tax rules in mind. Now you can plan ahead for taxes when renting out your RV.
Renting out your RV
Many RV owners use rental websites such as Outdoorsy to earn a little extra cash while they aren’t using their RV. In addition to the standard maintenance, owners should be aware of the tax implications of RV rentals.
Receiving money for the use of a dwelling also used as a taxpayer’s personal residence (your RV) generally requires reporting the rental income on a tax return. It also means some of the expenses become deductible reducing the rental income that’s subject to income tax.
Let’s learn all about taxes when renting out your RV.
This may be a house, RV, an apartment, condominium, mobile home, boat, vacation home or similar property. It’s possible to use more than one dwelling unit as a home throughout the year. For example, you can spend 6 months in your RV and then the other 6 months in your condo.
Used as a home
If you use your dwelling unit more than 14 days or 10% of the total days rented to others at a fair rental price, you will have to prorate rental expenses. Keep in mind rental expense deductions cannot be more than the rent received.
Personal use means use by the owner or owner’s family and includes anyone paying less than a fair rental price.
However, if you stay at the property to complete maintenance work, that time period does not qualify as personal use. This includes staying in the RV to repaint or fix a broken A/C.
Do you own a trailer, motorhome or campervan that is used 100% for rentals? This means you spend no time at all living in the RV. Then have no fear. You can deduct all expenses related to that rental.
Special rules generally apply to the rental of a dwelling unit that is used by the taxpayer as a residence during the taxable year. Usually, rental income must be reported in full, and any expenses need to be divided between personal and business purposes. You need to compute the percent of time used for personal vs. rental. Once you get that percentage you can figure out deductible expenses. Expenses include the cost of insurance, property taxes and any interest on a loan.
100% Deductible expenses
Fees for listing on a rental site like Outdoorsy and repairs directly related to the rental (a renter breaks something and you need to fix it) are 100% deductible. This applies even if your rental is split between personal and rental use.
If you have a 100% rental property, then expenses are usually 100% deductible no matter the income. Even if the expenses create a loss, you can most likely take them on your tax return.
How to report taxes when renting out your RV
Use Schedule C to report RV rental income and expenses of your RV as part of your 1040 Income Tax return.
Let’s look at an example.
You rent out an RV which you used 60 days in a year. You rent it for 100 days during the year.
The total income you received from the rental is $20,000 which is $200/night. This means your RV is used 63% for rentals.
Maintenance (Oil change, fix a broken refrigerator, etc.) $2,000
Listing Fees $1,000
Storage Fees $1,200 x 63% = $756
Phone for communicating with renters $600 x .63% = $378
RV registration $500 x 63% = $315
RV property taxes $400 x 63% = $252
Your total expenses will be 2000 + 1000 + 756 + 378 +315 + 252 = 4701
Your net profit from the business would be
(income) $20,000 – (expenses) $4,701 = (net profit) $15,299*
*There is also an allowable depreciation expense which I’m not taking into account here to keep things simple.
If your Schedule A deductions add up to more than the Standard Deduction, you will use Schedule A to report deductible expenses for the personal use of your RV. This includes costs such as RV loan interest and property taxes.
If the dwelling unit is rented out fewer than 15 days during the year, you don’t have to report any of the rental income nor can you take any of the rental expenses as deductions.
Does this all confuse you? Don’t know where to begin tracking and filing numbers. Feel free to reach out for help with filing your Schedule C as part of your income tax return.
What confuses you about taxes when renting out your RV?