Should I take depreciation bonus or section 179 deduction for last-minute 2024 RV purchase for rental business?

The timing of your RV purchase and payment can definitely impact your tax benefits, but there are a few important considerations here. First, to claim Section 179 or bonus depreciation, you need to place the asset "in service" in your business. This doesn't necessarily mean you need to generate income right away, but the property must be available for use in your business. If you purchase in December 2024 but don't make it available for rental until 2025, you technically haven't placed it in service in 2024. For Section 179, the deduction is limited to your business income, so with no rental income in 2024, you might not benefit from taking it that year anyway. Any unused Section 179 deduction would carry forward to future years. Bonus depreciation allows you to deduct a percentage of the cost without the business income limitation. For 2024, the bonus depreciation percentage is 80%, while for 2025 it drops to 60%. Given your situation, splitting the payments might align better with when you'll actually place the RV in service, which appears to be 2025.

I went through almost the exact same situation last year with my vacation cabin! I struggled with all the tax forms and depreciation rules until I found this amazing tool called taxr.ai (https://taxr.ai) that really helped me understand my options. It analyzed my specific situation and showed me how to maximize my deductions between bonus depreciation and Section 179. What was super helpful is that it let me run different scenarios - like comparing what would happen if I bought in December versus January, and it explained all the "in service" rules that matter so much for these deductions. The system checked all the specific rules about business use percentages and income limitations so I didn't have to guess.

Just wanted to follow up about my experience with taxr.ai. I was skeptical as I mentioned earlier, but I decided to try it out for my rental property tax questions. I'm genuinely impressed with how comprehensive it was! The system actually showed me that I was eligible for bonus depreciation even with my particular split payment situation. What really stood out was how it explained the "placed in service" rules in plain English - turns out I was overthinking some aspects and missing others entirely. The documentation they provided made it super easy to discuss with my CPA when I finally found one. Definitely worth checking out if you're dealing with these complicated depreciation decisions.

If you're struggling to get proper tax advice before your purchase deadline, another option is using Claimyr (https://claimyr.com) to get through to the IRS directly. I had a similar section 179 question last year that I needed answered quickly, and after trying for days to get through to the IRS myself, I used their service and got connected in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with clarified the "in service" rules for my situation and confirmed that I could take bonus depreciation even though my business wasn't generating income yet in the year of purchase. Having that direct confirmation from the IRS gave me confidence to move forward with my purchase timing.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was desperate to get an answer about my depreciation questions before year-end. Not only did I get through to the IRS in about 20 minutes (instead of the 3+ hours I waited last time), but the agent was surprisingly knowledgeable about section 179 rules. She confirmed that what matters is when the property is "placed in service" - meaning available for business use - not when it starts generating income. She also clarified that even with split payments, the full purchase amount can be used for depreciation calculations once you take ownership. This was exactly the information I needed and saved me from making a costly tax mistake!

I'm a short-term rental host who had to figure this out last year. My accountant recommended I use regular MACRS depreciation instead of Section 179 or bonus depreciation because of the 5-year recapture period. If you sell or convert the RV to personal use within 5 years, you'll have to recapture (pay back) the depreciation benefit you received. With regular depreciation over the longer recovery period (typically 5 years for RVs), you protect yourself better if your business plans change. Something to consider along with the timing question.

Don't forget about the business use requirement! For Section 179 and bonus depreciation, the asset must be used more than 50% for business. You mentioned 100% business use, so you're good, but make sure you keep detailed records proving that. If the IRS audits you and finds personal use, they can disallow your deductions. Also, have you calculated the actual dollar difference between the two depreciation options? With bonus depreciation dropping from 80% in 2024 to 60% in 2025, there could be a significant advantage to placing it in service this year if possible.

This is a complex situation that really highlights why timing matters so much with tax planning! Based on what everyone has shared, it sounds like you have a few key decisions to make: 1. **Payment timing vs. "placed in service" timing** - As others mentioned, what really matters is when you place the RV in service (available for business use), not necessarily when you pay for it. If you can purchase and list it in December 2024, you could potentially benefit from the higher 80% bonus depreciation rate. 2. **Consider your overall tax situation** - Since you mentioned having a day job, you'll want to think about whether taking a large depreciation deduction in 2024 actually benefits you tax-wise, or if spreading it out might be better. 3. **Don't forget about the recapture risk** - @Sophia Clark raised an excellent point about the 5-year recapture period. If there's any chance you might exit this business or sell the RV within 5 years, regular MACRS depreciation could be safer than the aggressive front-loaded options. Given that you need to decide quickly and haven't found a CPA yet, I'd suggest either using one of the tools mentioned (taxr.ai for analysis or Claimyr to speak directly with the IRS) or at minimum, run some quick calculations on the actual dollar differences between your options. The cash flow benefit of splitting payments might outweigh the tax benefits, especially if you're not certain about the long-term viability of the rental business. Sometimes the bird in the hand (better cash flow) is worth more than the potential tax savings!