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Old 08-14-2018, 07:59 AM   #1
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For you tax gurus....

When we purchase our Motorhome in the next year or two, we will have residences in AL, FL, and GA. FL will become our primary residence after we sell our business at the end of 2020. For you that know tax laws, which state should we register it in? Also, is there a tax advantage to finance all or part, or wiser to pay cash?
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Old 08-14-2018, 08:30 AM   #2
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Purchase wherever you want but title, pay sales tax and registration in your resident state.

The only reason to finance from a tax standpoint is to take a second home mortgage deduction, but that’s never a good enough reason to pay interest long term. And with the new tax law the standard deduction is so large that it would most likely remove that incentive in the first place. Unless your first home mortgage is in the millions+.
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Old 08-14-2018, 08:43 AM   #3
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Pay a real professional for an opinion determined by your financial particulars. It's worth it. No one on a forum can give you a meaningful answer without a detailed understanding of your specific financial situation.
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Old 08-14-2018, 09:05 AM   #4
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Firstly, I am not an accountant, so please talk to one before deciding what to do. In any case, here's my take on this issue.

1. There is no simple tax advantage to financing. Although the interest you'd pay would be deductible the same as a mortgage, you'd only recoup a fraction of the interest in reduced taxes. Even then, your total deductions would need to exceed the standard deduction for it to be deductible. If you're married/filing jointly and your income is between $77.4k and $165k, you'd recoup at most 22% of what you paid in interest.

2. If, on the other hand, your purchase money is currently invested and expected to earn more (or close to) the interest rate you'd pay, it could make sense to finance rather than purchase for cash. In deciding to do so, however, you should talk to an accountant since the tax implications can be complex. For example:

If your purchase money is in a tax-deferred account (IRA, 401k, 403b, etc.), pulling it out as a lump sum would result in dramatically increased income in the current year, which could push you into a higher tax bracket. Whatever you take out of the tax-deferred account would be taxed as ordinary income in the current year. This means that, in addition to forgoing the return your investments would have earned, you would need to pull out the purchase price plus the percentage you'd have to pay in federal and state income taxes, which would be a bigger tax hit than if the withdrawals were spread over several years. In this case, depending on the actual numbers, financing might be the right choice.

In any case, don't spend more than you can afford and finance for as short a time as possible. You don't want to find yourself owing more than the RV is worth somewhere down the line.
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Old 08-14-2018, 10:11 AM   #5
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When we purchase our Motorhome in the next year or two, we will have residences in AL, FL, and GA. FL will become our primary residence after we sell our business at the end of 2020. For you that know tax laws, which state should we register it in? Also, is there a tax advantage to finance all or part, or wiser to pay cash?
I'm no guru for anything, but I doubt you will find any state more friendly for registration and licensing costs than Florida. Not sure about AL. but I believe GA still has an ad valorem tax that continues to extract money from you every year when you renew the license plate.


As for cash vs. financing, you should consult a tax accountant. I'm not sure if the new tax laws allow deduction of second mortgage interest or not, but he can help you determine if you can earn more from investments (after tax) than the loan interest will cost you.
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Old 08-14-2018, 10:14 AM   #6
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Pay a real professional for an opinion determined by your financial particulars. It's worth it. No one on a forum can give you a meaningful answer without a detailed understanding of your specific financial situation.
I was going to reply with something similar. While it's good to get opinions here on most anything RV related, I sure wouldn't try depending on financial advice from a forum member, especially since there are so many variables. No doubt many here have a good idea what they're talking about but how would you know which is the best advice for your particular situation?

If you already have an accountant/tax preparer that you use for your business, might an idea be to start by asking him or her first?
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Old 08-14-2018, 11:50 AM   #7
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The answer to your question will boil down to in which state will you be a resident at the time of purchase? Residency issues are tricky at a minimum so be careful whatever you decide. Your timing will be critical. If you have already established residency in Florida then that becomes your state for registration, sales tax, etc.
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Old 08-14-2018, 12:04 PM   #8
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I'm no guru for anything, but I doubt you will find any state more friendly for registration and licensing costs than Florida. Not sure about AL. but I believe GA still has an ad valorem tax that continues to extract money from you every year when you renew the license plate.


As for cash vs. financing, you should consult a tax accountant. I'm not sure if the new tax laws allow deduction of second mortgage interest or not, but he can help you determine if you can earn more from investments (after tax) than the loan interest will cost you.
In Georgia you pay the normal sales tax (around 7% in most counties), each year you only pay a nominal $20 registration fee. The state switched to this method in 2014, prior they would get you for several hundred depending on the value of your vehicle (for an RV could be well over $1,000 annually).
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Old 08-14-2018, 12:25 PM   #9
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Purchase wherever you want but title, pay sales tax and registration in your resident state.

The only reason to finance from a tax standpoint is to take a second home mortgage deduction, but that’s never a good enough reason to pay interest long term. And with the new tax law the standard deduction is so large that it would most likely remove that incentive in the first place. Unless your first home mortgage is in the millions+.
FWIW, the home mortgage interest deduction is capped at a $750,000.
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Old 08-14-2018, 01:37 PM   #10
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Thanks- I will for sure check with our accountant. At this time, we own all property outright- so have no interest payments, so it was just a thought. We don't like financing, so would most likely opt not to, but wanted to make sure that we aren't missing out on some type of tax deduction that we did not know about. I don't think we are, but have emailed our accountant.

At this time, we live in Alabama, but I was told that the taxes for motorhomes is ridiculous here. Since we will be moving to FL after we sell the company, but also have a home in GA - I just want to start researching the best route to go regarding the motorhome tag and registration when the time comes.

THanks!
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Old 08-14-2018, 01:42 PM   #11
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In Georgia you pay the normal sales tax (around 7% in most counties), each year you only pay a nominal $20 registration fee. The state switched to this method in 2014, prior they would get you for several hundred depending on the value of your vehicle (for an RV could be well over $1,000 annually).


Well that is good to know. Thanks. I always thought an Ad Valorem tax was like double taxation. Here in MS. we pay the 5% state sales tax at purchase and the county adds their property taxes to the license fees every year on a slowly declining value, which I think is the definition of Ad Valorem.
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Old 08-14-2018, 02:37 PM   #12
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FWIW, the home mortgage interest deduction is capped at a $750,000.
The home mortgage interest deduction is capped way below $750,000. The $750,000 is the principal balance not the interest deduction. Any mortgage prior to 12-31-17 still has the million dollar limit.
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Old 08-14-2018, 03:10 PM   #13
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Well that is good to know. Thanks. I always thought an Ad Valorem tax was like double taxation. Here in MS. we pay the 5% state sales tax at purchase and the county adds their property taxes to the license fees every year on a slowly declining value, which I think is the definition of Ad Valorem.

From Wikipedia:


An ad valorem tax (Latin for "according to value") is a tax whose amount is based on the value of a transaction or of property. It is typically imposed at the time of a transaction, as in the case of a sales tax or value-added tax (VAT). An ad valorem tax may also be imposed annually, as in the case of a real or personal property tax, or in connection with another significant event (e.g. inheritance tax, expatriation tax, or tariff). In some countries a stamp duty is imposed as an ad valorem tax.
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Old 08-14-2018, 05:58 PM   #14
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The home mortgage interest deduction is capped way below $750,000. The $750,000 is the principal balance not the interest deduction. Any mortgage prior to 12-31-17 still has the million dollar limit.
Yeah. That's correct, but I didn't make that clear. And I didn't know that the million-dollar limit still applied to loans make prior to 2018. Thanks.
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