Mike and Trish wrote:
bdpreece wrote:
What do you know about the depreciation route? Had some friends who depreciated their motorhome then when they sold it had to claim the selling price as income. Any way around this?
I'm not an accountant, nor have I claimed my RV for business use, but I would say no. I've owned rental property, and I imagine the rules are the same for other business property. Depreciation expense is great for reducing profits while you're taking it (on a rental house, it can easily reduce a profit to a loss, for tax purposes), but if/when you later sell the property for more than its depreciated value, the difference comes back as income. Uncle Sam says: "Pay me now, or pay me later ..."
First off, that was an excellent analysis of the use of an RV in a business and thank you for posting it.
Mike, what you are referring to is called depreciation recapture. Once the depreciated property is sold there is a recapture of the depreciation. That recapture can be taxed at 25% so it is an item to consider. Not all of the depreciation will be recaptured, so it is not the end of the world, but it does bite when it happens.
Ed
