When April 15th rolls around every year, tears and lamenting abound as citizens all across the United States send in their checks to Uncle Sam. However, did you know that there are ways to use your enjoyment of your recreational vehicle to lessen your tax bill? Check out these tips to learn how to save some money while you do what you love.
You’re probably familiar with the tax deduction for mortgage interest. But did you know that the interest you pay on a loan you took out to buy your RV might qualify for the same deduction? That’s because it qualifies as a second home. Most RVs qualify as long as they have permanently affixed “sleeping, cooking, and toilet facilities.” In other words, you can’t put a cot and a camp stove in a van and call it an RV. However, most traditional RVs will qualify. Take note though that this RV tax deduction applies only to the RV itself; if you pull it with a truck or other vehicle that has a loan on it, that interest is not deductible.
SALES TAX DEDUCTION
The sales tax that you pay on large purchases, such as cars, major home renovations, and boats, is often tax deductible. The same goes for your RV. The beauty of this deduction is that, unlike the mortgage interest deduction, you can deduct the sales tax even if you paid cash for your rig. Also, keep in mind that the sales tax deduction is one-time only. Though, even at that, it can be a significant amount of money.
REGISTRATION FEES DEDUCTION
Registration fees may be assessed by the state, local government, or a combination of both. They’re usually calculated with a formula based on the weight of the vehicle and the value of the vehicle. The part based on the value of the rig is eligible for these RV tax deductions, so the more expensive the ride, the greater the deduction.
BUSINESS TAX DEDUCTION
If you use your camper to operate a business, and that includes renting it out when you’re not using it, you might be able to take a business use deduction. If you decide to claim this deduction, you’ll want to keep meticulous documentation of the income generated, miles traveled, and any other details related to the business use. Don’t forget to include the time you use the RV for meetings or traveling to meet up with clients at another location.
The Internal Revenue Service has very specific guidelines for business use tax deductions, including the RV tax write off. More than 50% of the nights spent in the RV must be for business, and you can’t stay in it for more than 30 days at a time. You should consult your tax advisor to be sure you follow all the rules to take advantage of this deduction.
SAVE EVERY PENNY
For most households, the purchase of an RV is a major one, comparable to a car or even a second home. No one minds paying their fair share of taxes, but if you have an opportunity to save a buck or two, why not take advantage of it? Tax deductions for RV owners like these can make it easier to fit the RV lifestyle into your budget. When you’re ready to buy your own RV for business or for pleasure, start with a visit to Hilltop Camper and RV. This family-run business can help you with everything from renting to buying with or without financing.
Image Credit: Africa Studio