If you’re using your rig part-time or full-time, and want to see what tax write-offs you may qualify for, it might be time to speak with a tax specialist.
Are you contemplating using a mobile home as a mobile salon, or offering mobile botox injections? Or are you looking to see the country and want to know if you can claim your travel trailer or RV as a primary residence for tax purposes?
It can be a good idea to research whether or not you can write off your camping lifestyle, but sometimes you may not get a clear cut answer. In this article, we’ll mostly talk about tax tips for people living in their motorhome, not renting it out as a business.
It’s possible that your motorhome or travel trailer could qualify as a second home (if you’re a part-timer) or as your primary residence (if you’re a full-timer), which means you could be eligible for an interest tax deduction on your loan. But you’ll want to verify the rules with a tax professional because Uncle Sam likes to change them up every now and then.
While it may be tempting to use DIY tax programs like TurboTax or H&R Block to figure these things out, consulting with a professional may be prudent.
For now, though, let’s get a few of the most commonly asked questions out of the way:
Is mortgage interest on a motorhome or RV tax deductible?
Yes, you can deduct any interest on an RV or travel-trailer if it is a primary or secondary home. To meet the requirements for being a “home” that can have deductible interest, the RV, houseboat or motorhome must have cooking, sleeping and toilet facilities.
If I live in an RV full-time, how can I write off loan interest or any rental property I stay at?
An RV or motorhome qualifies as a second home if it contains a kitchen, toilet and sleeping area. Available deductions include any interest on an RV loan and property taxes. These 2 areas of deduction are in the “Your Home” section on a 1098 form (for the interest) and in the “Cars and Other Things you Own” section (for property taxes).
Can I write off any finance charges from a recreational vehicle if I do not have a home with a primary mortgage?
Possibly. If you’re able to meet the amounts to itemize your deductions, then you may indeed be able to write off the mortgage interest on your RV—if that RV meets certain criteria to qualify as a primary or secondary residence.
If I purchased an RV to use while traveling for work, can I write it off? If so, what is the best way to write it off?
Possibly. To answer this question, first you’d have to answer another question:
Did you buy the motorhome while employed as an employee who receives a W-2?
If this is the case, then no you likely cannot deduct the RV as an unreimbursed employee expense.
However, if the rig was bought as part of a self-employed business, then it’s possible to deduct a part of the expenses if those expenses were directly related to your business.
Most often, buying an RV or motorhome is considered a “personal expense” and not a “tax deductible expense.” If this is the case, the only part of the motorhome that might be deductible would be the personal property taxes or sales tax if you can itemize your deductions.
Also, if the rig was purchased in 1 of these 5 states that do not assess sales tax (Alaska, Delaware, Montana, New Hampshire or Oregon), then that tax is not deductible.
If I solely use my RV or motorhome for business purposes, what can I write off?
You can actually write off a lot of your business expenses that are associated with the rig on your taxes. Not only associated expenses, but the whole RV may qualify for a business deduction. However, to use these multiple deductions, you’ll need to use the RV almost solely for business purposes—not for personal use. You shouldn’t even use the rig a couple of times a year for personal reasons as that can disqualify you from getting a full business deduction.
To muddy the waters on this topic further, the rules that govern how much the RV must be used for business purposes must meet 50% of the time. In addition, all of these business and personal uses must be clearly documented.
If you live and work in the RV, then certain business-related expenses might be deductible. You would want to keep close track of every business expense so that if the IRS asks to see what you are attempting to deduct, you can readily offer them detailed information.
If I rent out my RV as a business, what can I deduct?
You may qualify for additional tax deductions by using your RV or motorhome as a part of a business. To qualify, you would need to provide proof and documentation of any income generated by the camper. If you lived in the RV or motorhome as a part of the business, you’d need to present a log of all nights spent in it, plus the miles you drove in it.
At least half of the nights spent using the rig would need to be for business purposes. To add to the complication, you could not stay in the RV for more than 30 days in a row so that it still qualifies as a “transient” residence. Since these types of laws vary by state, and they can be even more complex than we’ve explained above, we highly recommend consulting with a qualified tax accountant.
Is an RV or motorhome legally considered a “mobile home”?
Another factor to keep in mind is the ever-changing federal tax laws. In 2017, federal laws changed in what was considered a “mobile home,” which seemed to exclude travel trailers and fifth-wheels by stating that “any self-propelled vehicle designed for transporting persons or property on a public street, highway or road.” (Previously, a mobile home was considered a “mobile home, house trailer, boat or similar property that has sleeping, cooking and toilet facilities.”) You will want to double-check IRS rules on what constitutes a “second home” before filing your taxes.
How should I get started filing my taxes?
To get started, you’ll want to itemize your RV to count towards any sales tax or business deductions. Keep all recipes of what you spend on the vehicle—not just what you paid to buy it, but any other costs associated with it. These receipts are especially important for business deductions.
Don’t forget to track mileage, any damage incurred in the course of business or any other costs that pop up while conducting business. You’ll also want to hang on to your 1098 form when it arrives (usually in February), which outlines all interest you’ve paid on any loans during the course of the previous year. This info is put into Line 10 of the Schedule A tax return form. If you’re going to use deductions and itemize your taxes, there are limits to how much you can get back.
If you’re contemplating buying an RV, motorhome or other conversion van for a business, there are a few things the IRS will want to see. These records include having a business debit and credit cards that are separate from your personal bank cards and accounts. The IRS will want to see a separation of personal income and expenditures versus business income and expenditures. Also, be sure to separate your business revenue from non-revenue expenses as the IRS will want to see this data.
Is buying a motorhome or RV worth the investment?
It’s true that purchasing a large home on wheels is a big commitment. A Class A motorcoach can cost anywhere between $80,000 and $250,000, and the interest on a loan for these 45-foot luxury behemoths can be hefty.
Class B motorhomes and RVs, on the hand, are smaller and more affordable, costing anywhere from $35,000 to $100,000. Class B motorhomes are usually built on a van chassis of some type.
The tax implications will vary depending on which type of vehicle you purchase because the sales tax will greatly vary. And don’t forget depreciation! Many studies and experts say that the best time to buy a mobile home or travel trailer is 5 years after its release.
Here at Classic Vans, we strive to answer all of your questions to the best of our ability, especially as they pertain to vans, camper vans and handicap accessible transportation. But we aren’t tax experts. We strongly recommend consulting with a knowledgeable tax professional if you have questions about taxes and your conversion van.