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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3919
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Tax Deductions for Travel Trailer used during Business Travel I

Resolved Question:

Tax Deductions for Travel Trailer used during Business Travel

I am a self-employed property manager. I have properties in Texas and Kansas, while my home residence is in Kansas. I travel up to 14 days per month between 3 or more different locations. To save money on hotel stays, I purchased a used travel trailer 3 months ago (no loan) and I am using it as on-site lodging. My question:

What expenses are deductible?
Can any portion of the purchase price be depreciated?
Can I use the Travel Trailer for vacations when not working?

Thanks!
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Lane :

Hi,

Lane :

You can depreciate the trailer over five years ... however, you need to adjust that by the proportionate amount of time it's used for business

Lane :

For example, lets say that you used it for business for 14 days x 12 / 365 = 46%

Lane :

If your investment in the trailer was %5,000 then you would (if you used it for business 100% of the time) get to depreciate essentially 1000 per year

Lane :

In this example, you'll use 46% of that (or 460)

Lane :

I still don't see you coming into the chat here... I can move us to the Q&A mode ... Maybe that will help

Lane :

Let me know if you have questions at all...

Lane :

Lane

Customer: replied 11 months ago.
Lane, Thank you for the reply.

Can you give me an example of how the depreciation would be adjusted proportionally?

Also, what expenses related to the Travel Trailer are deductible?
Expert:  Lane replied 11 months ago.

If your investment in the trailer was $5,000 then you would (if you used it for business 100% of the time) get to depreciate essentially 1000 per year.


But lets say that you used it for business for 14 days x 12 / 365 = 46%


In this example, you'll use 46% of that (or $460 per year)


I think we lost each other somewhere in mid- stream

Let me know if that makes sense.

And on the second question, you'd do the same thing (deduct maintenance and repair, but adjust it for the % of time during the year that you used it for business)

Lane
Customer: replied 11 months ago.
Thank you, XXXXX XXXXX starting to make a little more sense. Let me see if I understand this; If the trailer is not being used at all during the other 14-17 days of the month, then it is considered personal use and that percentage of time is not deductible?
Expert:  Lane replied 11 months ago.


Exactly.

The numbers I used were 14 days per month (that's why I multiplied by 12) ...

Then divided by 365, to get the percentage of time during the years that it was used for business.

Because you could be using it for ANYTHING else during the remainder of the year, it's only those business days that are deductible.

Lane
Customer: replied 11 months ago.
Sorry, I've not used this site much. Is this in live chat mode now?
Expert:  Lane replied 11 months ago.

No, so sorry ... once we've moved to this "Questions and answer mode" we;re stuck doing it this way

BUT we can still continue the dialogue here.

just not in real-time chat

... be happy to answer more on this...
Customer: replied 11 months ago.
Thank you, XXXXX XXXXX on the numbers.

So, would I apply that same percentage to all expenses as well? License, registration, repair and maintenance, etc?
Expert:  Lane replied 11 months ago.

Yes, exactly.

 

The repairs, license, registration, etc, are for the trailer in general.

 

Then you just apply that same percentage to get the business deduction

 

Lane

 

 

 

 

 

 

 

Customer: replied 11 months ago.
Great! Last thing:

So, we agree, if I bought the Trailer for $5,000 and I use it 50% of the time for business, then I can depreciate $500 (That's $5,000 / 5 * 50%) a year for the next 5 years.

I bought the Trailer in June of this year though (halfway through the year). Can I take the full $500 depreciation this year? Or do I have to pro-rate the depreciation amount to $250?

Thanks Again!
Expert:  Lane replied 11 months ago.
You'll need to pro-rate, sorry.

It SHOULD be based on "date placed in service."

So, since you bought it in June, that makes it easy ... cut in 1/2 again.

(expenses as well)

Customer: replied 11 months ago.
I have to cut my expenses in half too? That doesn't make sense
Expert:  Lane replied 11 months ago.

You have the trailer for half of the year, and use it for business (in your example 1/2 of THAT time)

Not reducing the expenses in the same fashion is like saying that you were doing repairs on it all year long.


Customer: replied 11 months ago.
But those repairs and maintenance would have been double if I were doing it all year long. It's not like I crammed 12 months of expenses into 6 months.
Expert:  Lane replied 11 months ago.
You are correct.

My apologies,

You still have to reduce it by the % of business use.

but the % of business use is 50% here

... jumped too quickly there

you are right
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3919
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 3 other Tax Specialists are ready to help you
Customer: replied 11 months ago.
whew... (wipes sweat from brow)

I was worried there for a minute.

Thanks for much for your help!
Expert:  Lane replied 11 months ago.


Yep,

Trust your intuition.

I was still on the business % piece.

Thanks for the accept!

Lane

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