What Is the IRS Depreciation Life for an RV?

Tax depreciation is an annual deduction allowing a business to recover an asset’s cost over time. If a recreational vehicle (RV) is used for legitimate business activities, a portion of its cost can be written off each year. The Internal Revenue Service (IRS) provides specific rules governing how an RV can be depreciated, turning part of its expense into a tax deduction against business income.

Eligibility for Depreciating an RV

To qualify for depreciation, an RV must be used in a trade or business or for an income-producing activity. For example, an individual who rents out an RV to others or a consultant who uses it as a mobile office can claim depreciation. The vehicle must be actively involved in the business, not just owned by it.

If an RV is used for both business and personal trips, only the portion attributable to the business is eligible for depreciation. For instance, if an RV is used for 60 business days and 40 personal days, only 60% of its expenses can be claimed. Personal commuting or family vacations do not count as business use.

Substantiating the business-use percentage requires detailed records. The IRS requires a mileage log tracking the date, miles driven, and business purpose of each trip. For rental RVs, a log showing all rental dates, income, and days of personal use is necessary to support the business and personal allocation.

Calculating the RV’s Depreciable Basis

The starting point for calculating depreciation is the RV’s basis, which is its total investment. The basis is the purchase price plus other costs to place the vehicle in service, such as sales tax, title fees, and delivery charges. Capital improvements made before the RV is used for business also increase its basis. A capital improvement adds value, prolongs its life, or adapts it for a new use, like installing specialized equipment.

The total cost basis is then adjusted by the business-use percentage to find the depreciable basis. This is the amount used for the annual depreciation calculation. For example, if an RV has a total cost basis of $90,000 and an 80% business use, the depreciable basis is $72,000 ($90,000 x 80%).

IRS Depreciation Methods and Recovery Period

The IRS classifies RVs as 5-year property under the General Depreciation System (GDS), which sets the recovery period for deducting the asset’s cost. The main calculation method is the Modified Accelerated Cost Recovery System (MACRS), which provides larger deductions in the early years of an asset’s life.

Under MACRS, 5-year property uses the 200% declining balance method. A half-year convention is applied in the first year, allowing only half of the normal depreciation. The depreciation percentages for 5-year property are 20% for year one, 32% for year two, 19.2% for year three, 11.52% for year four, 11.52% for year five, and 5.76% in year six.

As an alternative, taxpayers can elect the straight-line method, which spreads the deduction evenly over the recovery period. With the half-year convention, an owner deducts 10% of the depreciable basis in the first year, 20% in years two through five, and the final 10% in year six. This results in smaller initial deductions but may be preferable depending on a business’s tax situation.

Special Depreciation Options and Limitations

Taxpayers may use special deductions to accelerate cost recovery. The Section 179 deduction allows a business to expense an asset’s entire cost in its first year of service, up to a limit. For 2025, the maximum deduction is $1,250,000, which phases out if the total cost of qualifying property exceeds $3,130,000.

Bonus depreciation permits an additional first-year 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. Bonus depreciation is not limited by business income or an investment ceiling.

Limitations apply because the IRS considers RVs “listed property,” which are assets usable for both business and personal purposes. If the RV’s business use does not exceed 50% in a year, the owner cannot take the Section 179 or bonus depreciation deductions. Instead, they must use the Alternative Depreciation System (ADS), which requires the straight-line method over a 5-year recovery period.

Reporting Depreciation on Form 4562

All depreciation deductions for an RV are calculated and reported on IRS Form 4562, Depreciation and Amortization. This form is filed with the primary business tax return, such as a Schedule C, Form 1065, or Form 1120.

The RV is reported in Part V, Listed Property. This section requires details like the date it was placed in service, the business-use percentage, and total miles driven for business and personal use. The information for this section comes from the detailed logs maintained by the taxpayer.

The calculated depreciation is entered based on the method used. A Section 179 deduction is calculated in Part I, bonus depreciation in Part II, and standard MACRS depreciation in Part V. The final amount from Form 4562 is carried over as a deduction on the main business tax form, reducing taxable income.