Using an RV or 5th Wheel as your assignment lodging is a great way to work as a traveler. It removes the dreaded task of loading / unloading your vehicle with each assignment and having to find another apartment. Even though an RV, 5th Wheel and Travel Trailer are similar terms, we will just use the word “RV” to avoid repetition.
RVs are not cheap and some cost more than a regular home. It’s quite an investment. Paying apartment rent at assignments is equally as expensive and once spent the money is gone, unlike an RV, the place is still yours.
So…. Can you deduct your RV expenses? If you rented an apartment at the assignment you would deduct the expenses less any per diem you received. Since RV is bought as a substitute for an apartment or rented home, you would think that RV expenses would also be deductible when used in the same manner.
First, let’s clear one hurdle. To deduct ANY travel related expense for assignments, a traveler must maintain a qualifying tax residence. Not just a permanent legal residence which is something different. A tax home is your Principal Place of income OR when a person does not have a main place of work, their tax home can be at their principal residence if they have substantial expenses to maintain their dwelling that are duplicated when at an assignment.
Second, an RV must be a SECOND residence. If you travel in an RV and do not maintain a job or have a main dwelling that you incur a financial burden for, then we have failed the tests. Some RVers will leave behind an empty pad or vacant land and do not have a second residence that they use for lodging. A pad or vacant land is not a dwelling.
Now that the basic stuff is covered, let’s get to our question about deducting the RV expenses.
1) RVs are considered a “residence” in the Tax Code and more specifically, a “dwelling unit”. Basically, anything that one can live in with adequate provisions for living can rise to this level. RVs, boats, apartments and homes are all included
in this category. Just as mortgage interest and real estate taxes are allowed as a deduction for a main residence, so is interest paid on a RV and boat loan. Property taxes substitute for real estate taxes in RVs so those payments to local governments are deductible as well.
But what about the rest of the expenses?
2) Since an RV is a “dwelling unit” and considered a residence, it falls under a peculiar part of the tax code (§280A ) that places specific restrictions on deductible expenses for dwelling units. Whenever one uses a dwelling more than 14 days for personal lodging or >10% of days in which the dwelling unit is rented to other parties, deductions for the dwelling are limited to income derived from the RV or within the RV (like an office in the home) or not allowed at all.
The rule in #2 unfortunately answers the question that many travelers ask. It would be one thing to rent someone else’s RV on the road, but owning the RV as a residence triggers limitations that keep personal living expenses from becoming business expenses. Once you watch TV in the RV or do any personal act, you are using the RV for personal purposes as a dwelling and cannot deduct any further expenses. This is true even though you are using the RV as a second residence where you would normally deduct rent for an apartment at the assignment location. The ownership changes the deal.
As a traveler using your RV as a work residence, you can deduct interest and taxes on the RV. You cannot deduct the costs of the RV nor depreciate the RV since it is used as a residence > 14 days. As to the housing per diem, it applies to the other expenses such as pad rent. Check out the TOP 10 Questions for Travel Nurses on Taxes.
Jackson v Commissioner TC Memo 2014-160,
Dunford v Commissioner TC Memo 2013-189