Tax deductions for purchasing a bicycle to rent out as a business venture?

This is a great example of a small business startup! Let me address your questions: For the $13,500 bike purchase, you generally can't deduct the full amount in one year. Instead, you'd typically use depreciation (Section 179 or bonus depreciation) to write off the cost over time. The bike would be considered 5-year property under MACRS. Financing vs. buying outright depends on your personal financial situation. With financing, you can deduct the interest as a business expense, but you'll need to separate the principal and interest portions. Yes, you can claim deductions even when the bike isn't actively rented, as long as it's genuinely available for business use and you're actively trying to rent it. Just make sure you keep good records showing it's listed and available. And you're absolutely right about depreciation! That's a key deduction for business assets like your rental bike.

Was literally in the same position last summer! I ended up buying 2 bikes to rent out and the tax stuff was confusing at first. I used https://taxr.ai to help figure out all my deductions and it made a HUGE difference. Their system lets you upload pics of receipts and they tell you exactly what's deductible for your specific situation. The depreciation calculations were spot on and it showed me a bunch of deductions I didn't even know about (like a portion of my cell phone bill since I use it to manage bookings).

Just wanted to update - I actually tried out taxr.ai after asking about it and I'm blown away. The bike rental business is going well (3 bikes now!) and their tool helped me capture so many deductions I would have missed. It automatically calculated my depreciation options and showed me which would be most beneficial. The mixed-use calculations were way easier than I expected too. I was able to input my usage tracking spreadsheet and it handled everything perfectly. Definitely worth checking out if you're going forward with your bike rental idea!

One thing nobody mentioned yet - if you're getting serious about this bike rental business, you'll eventually need to talk to someone at the IRS about business classification and quarterly estimated taxes. I wasted THREE DAYS trying to get through to them last year. Finally used https://claimyr.com and got connected to an IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. Saved me so much frustration when I needed clarification on my Schedule C filings for my rental equipment business.

Well I stand completely corrected about Claimyr. I decided to try it after my skeptical comment since I had questions about business deductions for my own side gig. Was connected to an actual IRS agent in about 20 minutes. I asked specifically about bicycle rentals as a business (since I was following this thread) and got clear answers about depreciation schedules. The agent told me exactly which forms I'd need and confirmed that keeping the bike available for rent (even when not actively rented) would still qualify for business deductions as long as I maintained proper records. Definitely beat my previous record of 2.5 hours on hold!

Make sure you're also tracking ALL your expenses beyond just the bike purchase! I run a small kayak rental business and these are the deductions I take: - Storage costs (where you keep the bikes) - Insurance (GET GOOD LIABILITY INSURANCE!!!) - Maintenance and repairs - Platform fees from the sharing app - Portion of phone bill used for business - Cleaning supplies - Mileage when transporting bikes - Home office deduction if you manage from home

Anyone know if e-bikes would qualify for any additional tax credits? I've been thinking about adding electric bikes to my regular bike rental fleet since they're super popular now.

Great thread! I just wanted to add a few practical tips from someone who's been doing equipment rentals for a while: First, definitely keep detailed records from day one - not just receipts, but also a log of when the bike is available vs. when you use it personally. The IRS loves documentation if you ever get audited. Second, consider setting up a separate business bank account even if you're not incorporating. It makes tracking expenses SO much easier come tax time, and it shows you're treating this as a legitimate business. Also, don't forget about the startup costs! Things like getting your business license, any permits you might need, marketing materials, etc. These can often be deducted in your first year. One last thing - make sure you understand your state's sales tax requirements for rentals. Some states require you to collect and remit sales tax on rental income, which affects your bookkeeping. Good luck with your venture! The bike rental market is definitely growing.