Tag: RV

Posted on by Jan Roberg

Deducting Your RV as a Second Home

 

You may be able to deduct your RV interest on your tax return.

Traveling the country in your RV may be a little more affordable if you can take advantage of the tax break for the mortgage interest.

 

If you own a Recreational Vehicle for your own personal use, you might be able to deduct the interest you pay on your tax return!

 

The IRS allows you to deduct mortgage interest on two homes as long as the loan amounts do not exceed $1.1 million dollars.  That’s $1.1 million on the two homes combined, not $1.1 million per home.

 

You may be wondering, “Does my RV really qualify as a second home?”  According to the IRS, a second home must have a sleeping area, a bathroom and kitchen facilities to be considered a “home.”  So if your RV has all three, then your loan interest is deductible as mortgage interest on your tax return.

 

Besides deducting your RV interest on your tax return, you may be wondering if there are any other tax advantages to owning an RV.  The answer is:  maybe!

 

If you live in an area that charges personal property taxes on vehicles, like they do here in Missouri, you can also deduct those taxes on your Schedule A as well.

 

You might even deduct expenses when you use your RV for business purposes.  If that’s the case, I’ve got a whole blog post about that.  See  Can I Claim My RV as a Business Expense?  for more information there.

 

But let’s say you don’t use your RV for business, but you wouldn’t mind making a little extra cash on the side.  This is my favorite tax trick for RV owners:  You can rent your RV out for 14 days or less and not pay tax on that income!

 

I know, that sounds outrageous, right?  Let me explain:  If you own rental property, you normally would report your income and expenses on that property and it would be subject to all of the regular tax treatment for rental property.   There are tons of rules about what you can and can’t claim as a landlord and I’m not going into that here.  But if you’re looking for guidance on that there’s information in IRS Publication 527.

 

But – if you rent out your personal dwelling unit (which, that’s what we’re claiming your RV is) for 14 days or less, the IRS does not treat that as a rental property and they don’t tax that income!

 

How awesome is that?  When do you ever see that income is not taxable?  I’m also taking this from IRS Publication 527.  I know it sounds crazy, so I’m going to put the line from the IRS publication right here:

Your are allowed to rent your home for 14 days or less without paying tax on that income.

 

So, you can rent your RV to someone for 14 days or less, you can still take a deduction for your mortgage interest, and you don’t have to pay any tax on the money you make renting it!.  How sweet is that?

 

RVs can be pretty expensive, but it’s nice to know there are some tax breaks out there for RV owners.

Posted on by Jan Roberg

Can I Claim My RV as a Business Expense?

Modern Senior On Vacation With Wifi

 

I had a client that owned his own business and he wanted to buy an RV so he could go on vacation with his family.  He wanted to know if he could write off the cost of the RV as a business expense if he put a sign about his business on the RV while he traveled around the country.  The answer to that is a flat out no.  The IRS is all over that idea and they don’t like it.

 

But, it may be possible to write of an RV as a business expense if you really do use the RV for business.  For example, let’s say you have clients in another city that you regularly visit.  When you are visiting those clients, you normally need to spend time in a hotel.  So, maybe the RV might be a good choice for you.  You could travel to the location in the RV and sleep in the RV instead of a hotel.

 

So I said you might be able to claim it—this isn’t a rock solid deduction.  You’ve got to be able to prove it’s truly a business expense.  There are a couple of things you must absolutely do.

 

  1. You must have a log of all of your miles you drive in the RV.  Not one of those, oh I drove some business miles and write it down later—a very serious, a very real mileage log.  Over 50% of the miles you drive must be used for business to try to take the RV as a deduction.
  2. You must also keep a log of all the nights that you sleep in the RV.  Same rule—over 50% of your nights sleeping in the RV must be for business.
  3. You must also keep your business trips shorter than 30 days so that the RV counts as transient lodging.   That means I can’t buy an RV and drive down to Florida for the entire tax season and spend my summers in Missouri.  (Well I could, but I wouldn’t be able to write off the RV as a business expense.)

 

And the main point you must absolutely keep in mind—do not use the RV for entertainment.  No business parties on the RV.  The IRS is pretty strict about that.  Entertainment facilities are not tax deductible (things like swimming pools, hunting lodges, and bowling alleys.)  Make sure that your RV is for lodging or travel—not for entertainment.

 

So although my client with the sign idea couldn’t claim the RV as a business expense just for putting a sign on it, if he chose to drive the RV on his business trips and stayed in the RV overnight instead of a hotel—he might be able to claim part of the RV expenses for his business, as long as his business use was more than his personal use.

 

Remember, trying to claim an RV as a business deduction is kind of “out there” and highly likely to be audited by the IRS.  You’re going to want to have really good documentation and a good accountant to back you up on this one.