RV rental

Technical topics regarding tax preparation.
#1
Joanmcq  
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I guess this is like AirBnB but for RVs. Client rented out their trailer through a service. Personal property rental I guess. Does anyone have experience with these? It looks like it was rented 8 times throughout the year. Would you deduct expenses based on time rented over personal time used or 12 months? Sch E or C? They aren’t ‘in the business’ of renting RVs, looking to make extra money.
 

#2
adamant  
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Is said client offering other types of services along with the rental? If so, Schedule C, if not, Schedule E.

How many days was it rented during 2018?
 

#3
Joanmcq  
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Rented 35 days. But it’s not real estate, it’s personal property
 

#4
HowardS  
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An RV may qualify as a dwelling unit if it contains sleeping, cooking and bathroom facilities as most do.
See this article and the referenced tax court case:
https://www.forbes.com/sites/peterjreilly/2017/01/18/ninth-circuit-upholds-tax-court-in-disallowing-rv-business-deductions/#24aac7ac99b2

A “dwelling unit” is defined as “a house, apartment, condominium, mobile home, boat, or similar property.” Id. § 280A(f)(1)(A). Petitioners' RV is “similar property” within the statute's residual category. See, e.g. , Haberkorn v. Comm'r, 75 T.C. 259, 260 (1980) (holding that a “mini-motorhome” is a dwelling unit under § 280A(f)(1)(A)).


Schedule C or E decision based on the usual rental/service criteria.
Retired, no salvage value.
 

#5
adamant  
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This is exactly where I was going HowardS. I do have a question though, for depreciation purposes, where do you place the RV, if you were to consider it a dwelling unit?
 

#6
HowardS  
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Same as truck or van. It isn't real estate.
Retired, no salvage value.
 

#7
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If a dwelling unit, I say days rental use vs personal.
If a vehicle, I say miles rental use vs personal.
 

#8
Joanmcq  
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It’s a trailer though, so mileage isn’t appropriate. And the reference for treating as a residence has more to do with the deductibility of interest.

It’s not a vehicle and not real estate. Tax book says to put rent of personal property on line 21 and expenses on line 36 unless it’s a business.
 

#9
HowardS  
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Ah...I missed that the RV is a trailer. Back in my camping days an RV was a motorhome, a trailer was a trailer or tagalong.
Unusual to rent out a trailer as that requires a vehicle equipped for towing.
Still qualifies as second home for schedule E.
Line 21 is ok too.
Retired, no salvage value.
 

#10
ATSMAN  
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I had a client few years back rent out his 28 feet boat (with sleeping, bathroom and galley kitchen) for a friends family wedding for a week at $4200 rent. Rent was paid in check and it was added to line 21. We debated if it was schedule C income, but decided against it because he was not in the business of boat rentals. The gas and repair expense was subject to 2% haircut.

I have not had a situation similar to that post TCJA so I am assuming the expense subject to 2% haircut is lost??

OR could you net that out from the rent??
 

#11
Joanmcq  
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Per instructions to 1040, expenses are line 36, not hobby expenses
 

#12
Preppie  
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Joanmcq wrote:Tax book says to put rent of personal property on line 21 and expenses on line 36 unless it’s a business.

What version of the Taxbook are you using? Line 21 is now How much of your refund would you like to apply toward next year's taxes. :lol:
 

#13
ATSMAN  
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Joan, I am confused as well. Line 21 on the 2017 1040 is other income. I get that. But line 36 is the sum of adjusted gross income. We used to deduct these type of expenses on Sch A subject to 2% haircut.

Can you tell how how it is to be treated post TCJA? Thanks.
 

#14
Noobie  
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Do they treat it as their second home on their tax return?

I would think Sch E. Then treat as vacation home.
 

#15
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Here's what IRS Pub 525 says about this topic:
Reporting nonbusiness income. If you aren't in the business of renting personal property, report your rental income on Schedule 1 (Form 1040), line 21. List the type and amount of the income on the dotted line next to line 21. Reporting nonbusiness expenses. If you rent personal property for profit, include your rental expenses in the total amount you enter on Schedule 1 (Form 1040), line 36. Also, enter the amount and “PPR” on the dotted line next to line 36.
This activity doesn't go on Schedule C, because it's not subject to SE tax. And it doesn't go on Schedule E because Schedule E is for real estate. And the expenses don't go on Schedule A because rental expenses are deductible above AGI. See the Code!

These were also, almost, the rules before 2018. I don't do taxes for 2018, by choice.

Joan was right, Preppie.
 

#16
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Can I piggyback on this? Airbnb RV rental. If it were Airbnb real property, depreciation would be allowed. If the revenue goes on Line 8 (old Line 21), because this is not real property, can depreciation be added to expenses taken as other adjustments to income (Line 10a)? Since it's not real property, how about Sec 179? Too far?

I have spent hours on this forum today, looking at Airbnb threads. My head is spinning. Might be the Irish coffee I'm drinking. Of all the Airbnbs, RV Airbnbs are the worst. They seem like every possible kind of gray area.
 

#17
sjrcpa  
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179 is too far. You can't use it on property that was formerly personal use property.
 

#18
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5-year life depreciation, then? Purchased in 2019, put into use 2020.
 

#19
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IRC Sec 1402 and the related reg tells us that rentals from real estate are generally exempt from SE taxes.

Have we established that an RV and/or trailer is real estate under Sec 1402?

A poster cited Sec 280A above, but does that apply for an SE tax determination?
 

#20
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I was thinking of the SE tax question the same way I would for any airbnb, even though it's not real property. I have two clients who do this, actually. One of them provides no service, really. The renter takes possession and drives away with the RV. That one seems to me to be what I would have put on Sch E, if it were real property. Since it's personal property, I was thinking it belongs on the Other Income line, with expenses deducted as other adjustments, and I was thinking the expenses should be determined in the same way I would determine them if it were a Sch E real property rental, including a depreciation deduction (with an appropriate life, 5 years). No SE tax. The other client is going for a glamping experience and she provides a lot more hands-on service, including bringing the camper to the site and setting it up, providing breakfast, and she is willing to provide nearly anything the renter requests, down to locating fishing gear and having dinner on the stove when the renter arrives. But there is no daily cleaning or linen changes. I feel that her rental income could be Other Income, or it could be Sch C. She would have a loss, with depreciation. If it's a trade or business, she could still deduct the loss if she has material participation (and she does). If it doesn't rise to the level of trade or business, it's other income. In that case, can there be a loss, with depreciation included with expenses, since it has 43 rental days and 3 personal use days?
 

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