RVs: comfy, kitschy and possibly tax deductible
Friday, August 21, 2015
As the hubby and I cruised around a parking lot this week looking for a relatively close-in place to park, we quietly cursed the huge RV that had taken up half a dozen prime spots.
We also marveled at the fact someone was tooling around in the personal bus. Even with gas prices at relatively reasonable rates, it's got to cost an arm and a leg to fill up a recreational vehicle.
But the fuel factor apparently isn't a problem for a lot of folks. Refurbished RVs are making a comeback.
The ubiquitous Winnebago Industries' first motor home model. This 19-footer made in 1967 was built on a 6-cylinder Ford chassis. Photo courtesy the RV/MH Hall of Fame. (P.S. MH here stands for manufactured housing, not motor home.)
Old is new again: Folks are snapping up decades-old RV models and restoring them to their kitschy glory, including retro, and gaudy, shades of paint and trim, writes Jonathan Welsh in a recent Wall Street Journal article.
The nostalgia kick hasn't escaped manufacturers. The Recreational Vehicle Industry Association says that new shipments of the large vehicles rose 5.5 percent, to 202,653 units during the first half of this year, thanks in part to new RVs with old-fashioned looks.
While I'm still dubious about the cost of driving cross country in an RV, I can see the appeal. If you're not claustrophobic, they offer all the comforts of a stationary home.
Those accoutrements also might help you claim an RV/home-related tax deduction or two.
Qualifying home tax write-off rules: First, the vehicle must meet the Internal Revenue Service's definition of a home.
That, according to the federal tax agency, includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
So basically, if you can sleep there, cook there and take care of nature's calls there, then your RV counts as a home.
If it's your main home, and remember that you can have only one main home, then you can count any mortgage interest as well as related property taxes as itemized deductions.
Some retirees have downsized, selling the family home and taking to the road in RVs. In these cases, it is their tax-approved primary residence.
In many cases, however, an RV is a second, vacation home. This usage also offers tax breaks, too.
It's easier to meet the IRS rules and claim second-home deductions when the property is used solely as that, which is usually the case for an RV, and not as a rental. Here you can deduct mortgage interest the same way as for your primary home, along with any property taxes.
Sales tax, too: You also might be able to write off RV sales taxes, too, but only if Congress gets around to renewing the expired state and local sales tax itemized deduction.
That sales tax break is part of the extenders laws, which expired on Jan. 1. Conventional wisdom is that this collection of 50+ business and individual tax breaks, including the one for state sales taxes, will be back for 2015 and probably 2016 tax year. But don't count your tax chickens until Capitol Hill completely incubates the tax break eggs.
If/when the sales tax deduction is reinstated, you can choose to deduct on Schedule A that amount added to your purchases throughout the tax year or the state and local income taxes you paid. One or the other, not both.
If you opt to claim sales taxes, you'll most likely use the table for your state that the IRS provides. This gives you the average sales tax deduction amount for your filing status and income range. But if you made a major purchase in the tax year, you can add that tax amount to the table total.
A major purchase, says the IRS, is a car, motorcycle, boat, airplane and, yes, a motor home.
The sales tax deduction is a one-time thing, but with the sizable price of an RV, sales tax is a large piece of your purchase price.
Consider, but don't over value tax breaks: Finally, I've got to warn you that while tax breaks -- either home or sales tax related -- could be a benefit of buying an RV, don't base your purchase on the tax ramifications.
I agree with the IRS. An RV is a major purchase. That's why you need to look at all the reasons why you want one, evaluate which is best for you, and consider all, not just tax, costs.
If you can claim some tax breaks for your motor home, great! If not, sorry.
But make sure you're buying the gigantic vehicle for the right reasons for you first. Then think about the taxes.
And once you hit the road, be safe out there and enjoy your journey!
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