RV Tax Deductions you Should Know About

Taxes definitely qualify as one of the least-fun things to think about in the world. RVing, on the other hand, is one of our favorite topics for daydreaming. Just the mention of RV camping calls to mind all the exciting destinations waiting to be discovered, a bucket list of new sights, sounds, and experiences.

And the good news is, there’s some overlap in this seemingly disparate Venn diagram. Depending on your situation and your state, you might just qualify for some tax deductions on your RV if you own your own rig. And as not-fun as taxes are, the inarguable best part about all that paperwork is figuring out where and how to save some money (or even get a bigger return!)

Here’s what you need to know about RV tax deductions you may qualify for.

Tax Deductions for RV Owners

If you’re like most RV owners, you probably financed your vehicle with a loan. After all, even “inexpensive” RVs easily cost in the tens of thousands of dollars — not exactly a minor investment!

Most loans — whether discretionary, credit, or auto — don’t qualify for any sort of tax deduction. After all, you can ostensibly live without charging something to your credit card, and you can even do without a car.

Of course, in real life, making those sacrifices isn’t always possible. And not being deductible makes those loans into an even bigger headache, especially when you factor in depreciation. It’s easy to get sucked into debt when you’re shelling out interest for an asset that’s losing value by the minute.

But everyone needs a roof over their head, and Uncle Sam seems to sympathize. That’s why home mortgage interest is a qualified deduction on your taxes.

That leads us to the fun (well, sort of) part. Your RV may very well qualify as a second home (or your first, if you’re full-timing), which makes it eligible for this interest tax deduction.

RV Tax Deductions Guide

To qualify for the interest tax deduction, your motorhome does have to meet certain requirements. That’s so people don’t try to find a loophole and call a clearly unlivable dwelling a home.

But chances are, if your RV isn’t custom-made and pretty strange at that, you’re in the clear. Here’s the official legal mumbo-jumbo:

“For you to take a home mortgage interest deduction, your debt must be secured by a qualified
home. This means your main home or your second home. A home includes a house, condominium,
cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.”

Basically, if your camper is a place you’d actually be able to live for more than a night or two, it likely qualifies. However, the tow vehicle you use to haul a fifth wheel or other travel trailer does not benefit from this tax deduction. Keep in mind, however, that the interest is only deductible if you take out a secured loan on your RV — one that’s explicitly tied to the asset (in this case, your RV) and which allows the lending bank to repossess the rig if you default. If you take out a personal loan to cover the cost of your rig, the interest will not be deductible, and the rates tend to be much higher since the bank doesn’t have any collateral.

There are other ways you might receive an RV tax write-off, too. For instance, if you use your RV for business travel, you’d be eligible to write off mileage, which in 2019 equates to 58 cents per mile driven.

And if your RV functions purely as a rental vehicle, then it’s ONLY a business expense, which means you can write off far more of the costs related to its care and maintenance.

However, even if you do use your RV for your own purposes part of the time, expenses related directly to its role as a business asset are totally deductible. That means any repairs you have to make due to renter damage are deductible on your taxes, which can make a big difference in April.

RV Sales Tax by State

Along with the above benefits, your RV might also be eligible for a motorhome sales tax deduction, along with the sales tax assessed on other major purchases like cars, aircrafts, boats, or building materials for major home improvements. This tax deduction could benefit you even if you paid for your rig in cash and don’t pay interest on a loan.

Keep in mind, however, that if you purchased your RV in one of the five states that don’t assess sales tax, you wouldn’t qualify. Here are those states, just for a quick refresher:

  1. Alaska
  2. Delaware
  3. Montana
  4. New Hampshire
  5. Oregon

The sales tax rates in the other 45 states varies. You can find a full chart of sales tax rates assessed on vehicles, as well as other related costs like registration, here.

RV Tax Benefits

As you can see, there are a wide variety of RV tax deductions that can make owning one a boon at tax time. Whether you own a motorhome or a travel trailer, mortgage interest deductions, sales tax deductions, and business-related deductions if you use your RV as a rental vehicle can all bring your tax bill down substantially.

But what about those of us who use our rigs as a full-time residence — or even just live in it part-time? Your rig can qualify as a second home, which is why the mortgage interest is deductible. Here’s more of what you need to know about qualifying your RV as a second home.

RV as a Second Home?

Even if you don’t live in your RV for more than a few days out of the year, it may still qualify for the deduction mentioned above as long as it fits all the indicated requirements. And if you’re living full time in your RV as a residency, it definitely qualifies for a primary home tax deduction. Great news, right?

Now, as mentioned above, things are a little bit more complicated if you’ve ever used your RV for any sort of business purposes — like, say, for example, renting it out on RVshare ;). If so, you may also qualify for an additional tax deduction under business use. You’d need to provide proof and documentation of all the income you generated with the RV, and, if living in it was part of your business model, you’d need to have a log of all the nights you spent in it and all the miles you drove it. According to Roberg Tax Solutions, over 50% of the nights you spent on board would have to be for business purposes, and you wouldn’t be able to stay in the rig for more than 30 days at a time, so as to ensure it still qualifies as a transient residence.

These laws are a little bit more convoluted, so we’d recommend checking with your accountant about whether or not you can document your RV as a business item in your paperwork, and if so, how to do it.

RV Tax Write Off

You may still be wondering, “Can I really write off my RV? How do I even get started?”

We’re not financial experts here, so if you have any questions, we’d recommend speaking to a tax specialist or your personal accountant. RV taxes and their laws and deductions can vary by state and circumstance, and we wouldn’t want to steer you in the wrong direction!

But even if you only score a small write-off — or even if you don’t qualify at all — it’s nice to know that, once in a while, there’s a silver lining at tax time.

RV Tax Deduction 2019

One more thing before we let you go! Keep in mind that all filers are eligible to take the standard deduction, which gives you a certain amount of tax leeway without itemizing other deducted items. In the year 2019, the standard deduction is $12,200 for single filers and $24,400 for married couples. Thus, if the benefits of the deductions on your RV mortgage interest or business expenses would total to less than these numbers, it’s not worth itemizing them.

RV Tax Deduction 2020

We don’t know what the standard deduction will be in 2020 yet, but the rules above still apply. As always, if you have any specific questions, be sure to reach out to a qualified tax professional — it’s totally worth paying a little bit of money to be accurate on something as important as your taxes! Be sure to also check with them for filing deadlines – updated tax date is July 15, 2020.

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