What Is the Depreciable Life of an RV for Taxes?

An RV loses value over time due to age and wear, but this market value decline is different from tax depreciation. For tax purposes, depreciation is a structured deduction allowed for property used in a trade or business. This system allows a business to recover the cost of an asset over a specific period. Understanding this distinction is important for RV owners who use their vehicle for business.

Qualifying an RV for Depreciation Deductions

To claim depreciation on a recreational vehicle, the primary requirement is that it must be used for a legitimate business purpose. The Internal Revenue Service (IRS) requires the RV to be actively involved in a business activity, such as serving as a mobile office or transporting equipment. Simply owning an RV is not sufficient; its use must be directly related to business operations, as personal use like vacations does not qualify.

Substantiating the business-use percentage is a key part of qualifying for the deduction. The IRS requires detailed records to prove how much the RV was used for business versus personal activities. This is accomplished through a mileage log, which should document the date of each trip, the starting and ending odometer readings, the total mileage, and the specific business purpose of the travel.

It is important to distinguish between using an RV for business and designating it as a second home. An RV can qualify as a second home if it has sleeping, cooking, and toilet facilities, which allows the owner to deduct mortgage interest paid on a loan for the RV. This is separate from using it for business, which is the prerequisite for claiming depreciation deductions.

The percentage of time the RV is used for business directly impacts the amount of depreciation that can be claimed. If an RV is used 75% for business and 25% for personal trips, only 75% of the RV’s cost basis is eligible for depreciation. Should business use fall to 50% or less, the rules for depreciation become more restrictive, requiring a less accelerated method of calculation.

Determining the Depreciable Life and Calculation Methods

For federal tax purposes, an RV is generally classified as 5-year property under the Modified Accelerated Cost Recovery System (MACRS). This system allows for the recovery of the asset’s cost over a six-calendar-year period. The longer period is because the tax convention assumes the asset was placed in service in the middle of the first year.

Before calculating depreciation, you must determine the RV’s cost basis. The basis is its purchase price, including any sales tax, delivery fees, and initial improvement costs that add to its value or extend its useful life. This total cost is then multiplied by the business-use percentage to establish the depreciable basis.

The primary method for calculating this deduction is MACRS, which permits larger deductions in the early years of the asset’s life. Using the 200% declining balance method for 5-year property, the depreciation rate is 40%. For an $80,000 depreciable basis, the first-year depreciation would normally be $32,000, but the half-year convention adjusts this to $16,000. Subsequent years’ calculations apply the 40% rate to the remaining undepreciated balance.

Taxpayers may also have options to accelerate their deductions into the first year the RV is placed in service. Bonus depreciation allows for an immediate deduction of a percentage of the asset’s cost. For property placed in service in 2025, the bonus depreciation rate is 40%. This rate is scheduled to decrease to 20% in 2026 before being eliminated.

The Section 179 deduction is another option, but it has specific limits for vehicles. While the general limit for 2025 is $1,250,000, sport utility vehicles with a gross vehicle weight rating over 6,000 pounds are subject to a much lower deduction limit of $31,300. Since many RVs fall into this category, it is unlikely that the entire cost can be expensed in the first year using Section 179. All depreciation calculations are reported on IRS Form 4562, Depreciation and Amortization.

Tax Implications Upon Sale

When an RV that has been depreciated for business use is sold, specific tax rules come into play concerning the recapture of depreciation deductions. Over the years, the depreciation claimed reduces the RV’s adjusted cost basis. The adjusted basis is the original cost basis minus the total depreciation taken. This figure is what is used to determine the gain or loss upon sale.

If the RV is sold for a price that is higher than its adjusted cost basis, a gain is realized. The portion of this gain that is a result of the depreciation deductions previously taken is subject to “depreciation recapture.” This means the gain, up to the total amount of depreciation claimed, is taxed at the owner’s ordinary income tax rate, not the more favorable long-term capital gains rate.

Consider an RV with an original cost basis of $90,000. Over several years, the owner claims $40,000 in depreciation deductions, reducing the adjusted cost basis to $50,000. If the owner then sells the RV for $65,000, the total gain is $15,000. Because this gain is less than the total depreciation taken, the entire $15,000 is “recaptured” and taxed as ordinary income.

If the same RV were sold for $95,000, the total gain would be $45,000. In this scenario, the first $40,000 of the gain, equal to the total depreciation taken, would be recaptured as ordinary income. The remaining $5,000 of the gain would be treated as a capital gain, which is often taxed at a lower rate.