How the RV Depreciation Schedule Works

Recreational vehicle (RV) depreciation is the reduction in an asset’s value over its lifespan. The moment a new RV is driven off the dealership lot, its market value begins to decrease, impacting personal budgeting and financial planning. This decline in value also becomes a tax consideration if the RV is used for business, allowing for a portion of its cost to be deducted over time.

Factors Influencing RV Depreciation

Several factors shape the rate at which an RV loses value. The type or class of the RV is a primary determinant, as larger Class A motorhomes often depreciate faster than smaller Class C models. Travel trailers and fifth wheels have their own depreciation curves, falling somewhere between the motorhome classes.

Brand and model reputation play a role in value retention, as manufacturers known for quality construction often command higher resale values. A well-documented maintenance history and good physical condition also preserve an RV’s value. Cleanliness and the absence of damage are important to potential buyers.

High mileage on a motorhome suggests extensive use and potential wear, leading to a lower valuation. However, extremely low mileage on an older unit can also be a concern due to problems caused by inactivity. Broader economic conditions, such as fuel prices and consumer confidence, also influence supply and demand, affecting resale prices.

Standard RV Depreciation Rates

The most significant drop in an RV’s value occurs within the first year of ownership, where it can lose approximately 20% of its purchase price. After this initial decline, the rate of value loss continues at a slower pace through the first five years.

By the end of the third year, an RV may have depreciated by about 25% to 30% from its original cost. At the five-year mark, it may be worth around 35% to 40% less than the initial price. After this point, the depreciation curve flattens, and the annual percentage loss becomes less severe.

By the time an RV is ten years old, it may have lost around 60% of its original value. These figures are general estimates that serve as a baseline for owners to anticipate future worth for a potential sale or trade-in.

Calculating Depreciation for Business Use

When an RV is used for business, its owner may claim a depreciation deduction on their taxes. To qualify, the IRS requires the RV be used more than 50% of the time for business activities, a standard known as the “more than 50% business use” test. Record-keeping is necessary to substantiate this usage through a log of mileage, dates, and the business purpose of each trip.

The first step is to determine the RV’s basis, which is its cost. If used for both business and personal reasons, the basis is multiplied by the business-use percentage to find the depreciable basis. For tax purposes, the IRS uses the Modified Accelerated Cost Recovery System (MACRS), which classifies RVs as 5-year property. This means the cost is recovered over six years due to a “half-year convention” that applies in the first year.

The MACRS 200% declining balance method provides specific percentages for each year:

• Year 1: 20%
• Year 2: 32%
• Year 3: 19.2%
• Year 4: 11.52%
• Year 5: 11.52%
• Year 6: 5.76%

For an RV with a depreciable basis of $70,000, the first-year deduction would be $14,000 ($70,000 x 20%). Taxpayers may also be able to use special deductions like bonus depreciation, which for 2025 allows for an additional first-year deduction of 40% of the basis.

Reporting Depreciation on Your Tax Return

The annual depreciation amount must be reported on the correct tax forms, primarily IRS Form 4562, Depreciation and Amortization. This form is required for the first year you claim depreciation on the RV and for any year you claim depreciation on listed property, which includes vehicles.

For an RV, you will complete Part V of Form 4562, which is for Listed Property. In this section, you will enter the RV’s description, the date it was placed in service, and the business-use percentage. You will also enter the basis for depreciation, the 5-year recovery period, the MACRS method, and the calculated deduction for the year.

The total from Form 4562 is then transferred to your business tax form. For a sole proprietor, this amount is reported on Schedule C (Form 1040), Profit or Loss from Business.