Your RV Could Reduce Your Taxes!
What’s your main reason for purchasing a recreational vehicle? Traveling with your family cross-country in your motorhome for glorious adventures? Full-time living? Some people use their RVs as a business asset. The way you use your RV determines whether it can be a tax benefit.
Recreational vehicle loan rates are closely tied to automobile interest rates and they work basically the same way — RV interest rates are based on what the market will bear. Just like automobile buyers, RV buyers are well advised to time their purchases when interest rates are as favorable as possible. It’s important not to get into a rush! And that can be difficult, because it’s so exciting to buy an RV.
RV Sales tax. In some cases, you may be able to deduct all or part of sales tax. Look for a tax form worksheet to calculate how much you can deduct. Changes in tax laws can affect RV sales taxes deductions.
Full-timers who consider their RV a primary residence may have to jump through more hoops to get a loan. This is because the loan is considered a higher risk. Full timers don’t have equity in a permanent home to solidify their financial standing. They also use their RV daily, which increases the potential for damage and decreasing value. Full-timer loans often require additional qualifying paperwork, and some lenders would rather not deal with the extra requirements. As a result, recreational vehicle loans may be more difficult to get for these RV owners.
RV vehicle registration. In most states, annual vehicle registration isn’t deductible. In some states without personal property taxes, part of your vehicle registration costs may be tax-deductible. Registration costs are split into amounts based on weight and amounts based on the RV’s value. It’s the portion based on value that could be deductible.
RV business deduction. Many RV owners use their rigs for business. The cost of the RV and other travel expenses can be deductible if you prove your business requires traveling and/or working out of the RV regularly. However, beware of tax code clauses canceling out this benefit if your RV is used for personal purposes more than 14 days per year. The court has been known to get picky about this, considering even watching TV in the RV as personal use. People who live and work in RVs full-time often aren’t allowed to deduct business expenses, because they have no home tax base. If you are able to use your motorhome, fifth wheel or travel trailer as a business expense, this amount actually reduces net taxable income by the amount of the expense or a depreciated amount. Be sure to keep meticulous records to prove your tax position.
Don’t assume anything! Tax laws change every year, and special conditions can work either in your favor or against you. Always check with an accountant or tax specialist before figuring any tax deductions into your decision to purchase an RV. The most important thing, after all, is enjoying those adventures!