Modern recreational vehicles, also known as RVs or 5th wheels, are more than just a comfortable home away from home. RV owners may be eligible for federal tax deductions. If the RV is used for business, some of the costs and expenses of owning and maintaining the RV can also be deducted. Taking advantage of these deductions can help lower your federal tax liability.
RV Second Home Qualification
The IRS has established minimum standards for an RV to be considered a second home. The RV normally must be self-contained and have permanent, fixed sleeping quarters, cooking and bathroom facilities. For example, if you own a pop-up camper with a stove and bathroom facilities, it will probably qualify as a second home. A cot or a sleeping bag you toss in the back of a van or camper won’t qualify.
Mortgage Interest Deduction Qualifications
To deduct your RV mortgage interest, the loan must be secured by the RV. You cannot deduct RV mortgage interest if you purchased the RV by taking out a home equity loan on your first home and using that cash to buy the RV. If you have more than one qualifying second home, you can only deduct the mortgage interest on one of them. Your mortgage interest is fully deductible if the total amount for the year is $100,000 or less. The amount of interest you can deduct depends on the total amount financed and the loan terms. For example, if you take out a $75,000 30-year RV loan at 10 percent interest, you can deduct mortgage interest of $7,481.
Qualifying Business Expenses
You can deduct qualified expenses if you conduct business from your RV or motor home. One key test the IRS uses is if the expenses are considered ordinary and necessary in your line of work. For example, if you use your RV to provide dental care for rural and home-bound patients who are unable to get to your office, you can deduct the costs of your mileage, fuel, business equipment and dental supplies. But if your patients could travel to your office, the expenses probably are not deductible.
Business Expense Deductions
You must maintain excellent accounting records to substantiate your deductions. Keep receipts for all meals, tolls and RV repair bills along with your mileage. For example, if you drove 15,000 miles you can multiply your 15,000 miles by the 2012 standard deduction of 55.5 cents a mile and deduct the total of $8,325. Consult IRS Publication 535 for a list of all of the available business expense deductions.
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