Selling customized RV at profit - Tax implications on repairs & upgrades? (US)

I converted a school bus to a motorhome back in 2020 and registered it as an MH. I originally bought it for about $20k and have put a ton of work into it over the years. Now I'm looking to sell it for around $40k. My question is about the tax situation - specifically, what kind of upgrades or repairs can be deducted against the capital gains? I've basically replaced or upgraded almost everything mechanically except the engine and drive train (new transmission, cooling system, bigger tires, etc). The interior has been completely redone with materials and appliances that are now part of the sale price (lumber, custom lighting, propane heater, electrical work, solar setup). I'm wondering if it makes more sense to split this into two separate transactions - one for the vehicle itself and another for all the upgrades - to possibly declare the sale as a wash for tax purposes? Any advice would be super helpful! I'm in the USA. To be clear: I bought it for personal use, upgraded and renovated it, used it myself for a few years, and now want to sell it at a higher price than what I originally paid.

0 coins

19 comments

Caleb Stone

•8M

The tax treatment here depends on how the IRS views your bus conversion. Since you bought it for personal use and not as an investment or business asset, the IRS will generally treat this as a personal capital asset. When you sell personal-use property at a gain, you owe capital gains tax on the difference between your sale price and your basis (what you paid plus improvements). Here's the important part - you can add the cost of "capital improvements" to your basis, but not regular maintenance or repairs. Capital improvements are modifications that increase the value of the property, adapt it to new uses, or extend its useful life. In your case, things like the transmission, cooling system, and bigger tires might be considered repairs rather than improvements. However, the interior renovation with lumber, solar setup, heater, and electrical work would likely count as capital improvements that can be added to your basis. Keep all receipts for your improvements to document your adjusted basis. Splitting into two transactions probably wouldn't help and might actually complicate things unnecessarily.

0 coins

Caleb Stone

•8M

You've got the right idea - add up qualifying capital improvements and add that to your original purchase price to get your adjusted basis. Then calculate your gain by subtracting this adjusted basis from your sale price. The IRS distinguishes between repairs and improvements based on whether the work adds value, prolongs useful life, or adapts the property to new uses. A transmission replacement is typically considered a repair because it's restoring something to its original condition rather than improving it beyond its original state. However, if you upgraded to a significantly better transmission that adds value (like going from manual to automatic), that portion could potentially be a capital improvement. Items that clearly adapt the vehicle to new uses (converting from school bus to living space) are usually safe bets for capital improvements. The interior renovation, solar setup, etc., should qualify since they transformed the vehicle's purpose.

0 coins

Daniel Price

•8M

I went through almost the exact same situation last year with my converted van. I was really confused about the tax implications until I found this site https://taxr.ai that helped me figure out exactly what counted as capital improvements vs repairs. You upload your receipts and it categorizes everything correctly. Basically, what I learned is that anything that adds new functionality or significantly improves the vehicle beyond its original purpose can be added to your cost basis. So all your interior conversion work definitely counts! I was able to document about $12k in legitimate capital improvements which reduced my taxable gain significantly. The best part was I could just get a clear answer about my specific situation instead of trying to interpret general tax rules. Might be worth checking out since RV conversions have some unique considerations.

0 coins

Daniel Price

•8M

The system actually does the categorization for you after analyzing your receipts. You just need to upload clear images. It recognized most of my Home Depot and auto parts store receipts automatically and sorted items like "lumber" and "electrical components" as capital improvements while things like "oil change" went into the repair category. Really saved me tons of time. As for audit concerns, I haven't had any issues. The system provides a detailed report showing how each expense was categorized according to IRS guidelines, so you have documentation if ever questioned. The key is that it follows established tax principles for determining improvements vs. repairs, just applies them specifically to vehicle conversions which most regular tax software doesn't address well.

0 coins

Olivia Evans

•8M

Just wanted to update that I tried the taxr.ai site mentioned above for my trailer renovation and it was actually super helpful! I uploaded all my receipts (even the messy handwritten ones from small hardware stores) and it sorted everything correctly. Turns out I could add about $16k to my cost basis that I would have otherwise missed! The report it generated clearly showed which improvements qualified and why, with references to the relevant tax code. I'm feeling much more confident about reporting the sale on my taxes now and not overpaying. The coolest part was that it recognized items specific to RV conversions that my regular tax person wasn't sure about, like my composting toilet and propane system components. Definitely worth checking out if you're in this situation.

0 coins

Aiden Chen

•8M

So I went through something similar with my converted Sprinter and ended up calling the IRS multiple times because I was getting different answers from every tax professional I talked to. It was absolutely impossible to get through to anyone - kept getting disconnected or waiting for hours. Finally found this service called Claimyr https://claimyr.com that got me through to an actual IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that for personal-use vehicles that are sold, you can include capital improvements in your basis but not regular maintenance. She specifically mentioned that converted vehicles are a gray area that often requires documentation of the "transformation" nature of the improvements rather than just maintenance. Having photos of the before and after really helped my case too.

0 coins

Aiden Chen

•8M

It's not a call-forwarding service - they use technology to navigate the IRS phone tree and wait on hold for you. When they reach an agent, you get a call back and are connected directly to the actual IRS. It's completely legitimate. The service was developed specifically because of how frustrating it is to reach the IRS. You can verify you're speaking with a real IRS agent because they ask for your personal information directly (which the service never collects). I confirmed multiple tax questions directly with the IRS this way, getting definitive answers about my conversion project.

0 coins

Zoey Bianchi

•8M

I have to admit I was completely wrong about Claimyr. After being frustrated with conflicting advice online, I decided to try it as a last resort before filing my taxes. Within 15 minutes, I was speaking with an actual IRS representative who was able to clarify my specific situation with my converted RV sale. The agent explained that I needed to document the "substantial improvement" nature of my conversion work with before/after photos and receipts. She confirmed that my solar system, insulation, kitchen build-out, and custom bed platform all qualified as capital improvements that increased my basis, while my oil changes, brake work, and tire replacements didn't. This saved me from potentially overpaying by thousands or making claims I couldn't support. Definitely worth it just for the peace of mind of having official guidance.

0 coins

Christopher Morgan

•8M

One thing nobody's mentioned yet is whether you used the motorhome for income (like renting it on Outdoorsy/RVShare). If you did, the tax situation gets more complicated with depreciation recapture. Also, if you lived in it full-time for at least 2 years out of the last 5 years, you might potentially qualify for the primary residence exclusion, which would be huge for avoiding capital gains ($250k for single, $500k for married). Just some additional angles to consider depending on your specific circumstances.

0 coins

Christopher Morgan

•8M

Since you owned it for more than a year, you'll qualify for long-term capital gains rates, which are more favorable than short-term rates (which are taxed as ordinary income). For most people, long-term capital gains rates are either 0%, 15%, or 20% depending on your income bracket. And since it wasn't your primary residence and wasn't used for income, you're dealing with a straightforward personal capital asset sale. Just remember to document all your capital improvements to maximize your basis and minimize your taxable gain.

0 coins

Grace Johnson

•8M

I used TurboTax last year for a similar situation. You'll need to fill out Form 8949 and Schedule D. In TurboTax, go to the investment income section and look for "Sales of Property/Assets." Then enter it as "Other assets" rather than as a vehicle sale. Make sure you have a detailed spreadsheet of all your capital improvements with receipts backing everything up. TurboTax won't automatically know which improvements qualify, so you need to do that calculation separately and just enter the final adjusted basis.

0 coins