|RVers, RVs, and Income Taxes
RVers and boaters may have three
possible income tax deductions
RVers, RVs, and Income Taxes
Your RV may help you at tax time to reduce you taxable income if you file Schedule A (Itemized Deductions)
with your Federal Form 1040 tax return.
Interest - The first potential savings is the currently allowed deduction for interest on RV or boat loans for RVs
or boats with kitchen and bath facilities because they are considered a second home.
All interest on loans backed by an allowable first or second mortgage, or line of credit on the primary or
secondary residence is deductible against that residence, even if the funds are used to purchase an RV. This
interest will be reported to you by the lender on a Form 1098.
Several conditions apply to deducting interest. You can only deduct the interest on one second home. If you
are already claiming a second home, then consider using a second mortgage or a line of credit against the
current first or second home property to provide funding for the RV purchase.
In addition, deductibility of RV or boat loan interest requires that the RV or boat be the collateral for the loan,
usually by a lien against the RV certificate of title.
Note: The interest on loans based on your signature or unsecured line of credit to buy an RV is not
Personal Property Tax - The second potential deduction on Schedule A is for state property taxes levied by a
number of states and counties on RVs, boats, or personal vehicles or property. This includes states such as
VA, NC, GA, CT and CA.
Sales Tax - The third deduction allows taxpayers who file Schedule A as part of their tax return to deduct either
sales tax or state income tax to reduce taxable income.
The sales tax deduction that applies to all items purchased in 2008. The value of the sales deduction is based
on your reported income. You may be able to increase the amount of the deduction by separately specifying
big ticket items such as vehicles, RVs, or boats.
The sales tax deduction is valuable for residents of states with no income tax with no income tax, such as
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, or those with just a flat tax on
dividends and interest income (New Hampshire and Tennessee).
We recommend that all taxpayers filing Schedule calculate the deductions for both state income taxes
and the sales tax and select whichever provides the larger deduction.
The tax preparation software programs such as TurboTax will walk you through the use of the above
deductions for interest, vehicle property tax, and sales taxes while preparing your Federal tax return. Questions
about the applicability of deductions related to your RV for personal or business use should be discussed with
your tax preparer.
RVers using their RV for business purposes should discuss the above items as well as other RV-related
deductible business and depreciation expenses with their tax preparer. Business-related RV expenses should
be reported on Schedule C and could include additional deductions, such as depreciation, operating costs,
maintenance, storage, registration, overnight fees, and more.
We recommend using a professional tax preparer if you are claiming business use of your RV and
require a Schedule C to be included with your personal Federal Form 1040 tax return.
What About State Income Taxes - A total of 41 states impose income taxes. New Hampshire and Tennessee
apply it only to income from interest and dividends. Seven states (Alaska, Florida, Nevada, South Dakota,
Texas, Washington, and Wyoming) do not tax personal income. See the Retirement Living Information Center
website for more information.
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