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Old 01-22-2016, 02:26 PM   #1
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RV (2nd home) Tax ??s

1) I purchased my first TT in July from a private party (no sales tax). I did use a loan. I sold that TT in December to a private party. Can the interest accrued for the 6 months be a write-off?

2) I purchased my fifth wheel in December 2015 from an out-of-state dealer. I did not pay the sales tax until January 2016 when I registered it in my home state. Can the sales tax be claimed against 2015 or do I need to wait until next year to claim it?

3) I always do my taxes on H&R Block online. Where should I input this information?

Thank You,
Zac
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Old 01-22-2016, 07:22 PM   #2
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The interest on a first or second home loan is tax deductible if you itemize deductions, and an RV qualifies as either one.

The sales tax on a vehicle maybe deductible, if you itemize, but I think it applies in the year when it was paid. Consult a tax advisor about that if you want to deduct it in 2015. Sales tax deductions may not apply if your state has an income tax - too many options and alternatives to describe here. Read the instructions for Schedule A at https://www.irs.gov/pub/irs-pdf/i1040sca.pdf

Itemized deductions go on Schedule A.
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Old 01-22-2016, 08:40 PM   #3
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Quote:
Originally Posted by Zac808 View Post
1) I purchased my first TT in July from a private party (no sales tax). I did use a loan. I sold that TT in December to a private party. Can the interest accrued for the 6 months be a write-off?

2) I purchased my fifth wheel in December 2015 from an out-of-state dealer. I did not pay the sales tax until January 2016 when I registered it in my home state. Can the sales tax be claimed against 2015 or do I need to wait until next year to claim it?

3) I always do my taxes on H&R Block online. Where should I input this information?

Thank You,
Zac
As an individual you are on a cash basis tax payer. What that means is that you can only take a deduction for second home interest if you actually PAID that interest. Accrued interest is not deductible by a cash basis taxpayer. The same holds true for the sales tax. You can't take the sales tax deduction if you didn't pay the sales tax in 2015.

To be blunt, the fact that you have to ask where to input this info means you probably should be talking to a professional instead of trying to be a do it yourself for the most complex set of laws on the planet.
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Old 01-22-2016, 09:38 PM   #4
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Your RV is considered your second home and as long as it is outfitted like a home, shower, bed etc you can deduct the interest as long as you have paid the interest during the tax year. Also some states allow you to deduct RV taxes when you bought it. Additionally if you use it to entertain employees or clients then you can deduct it as a business office.
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Old 01-22-2016, 09:58 PM   #5
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When we bought the Magna the finance guy was sharp enough to make sure we could deduct the use/sales tax we paid. Even the license registration shows it as a seperate item. Will make it easy to backup if we have to.
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Old 01-23-2016, 09:01 AM   #6
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Originally Posted by cmcguire48 View Post
Your RV is considered your second home and as long as it is outfitted like a home, shower, bed etc you can deduct the interest as long as you have paid the interest during the tax year. Also some states allow you to deduct RV taxes when you bought it. Additionally if you use it to entertain employees or clients then you can deduct it as a business office.
The interest comment is correct and you can deduct it as interest on a second home. If you also have another second home then you can only take one and obviously you would take the one with the higher interest. Sales taxes paid on an RV are also deductible providing you itemize your deductions and your sales tax paid, including the sales tax from the table for your state and locality, exceeds your state income tax paid. Again, you would take the higher of the two deductions.

The business comment is an entirely different matter. There have been a number of cases recently regarding RV's taken as business expenses. One of them involved a taxpayer taking an RV as an office in home. He lost his case because there was no separate and distinct office area in the RV. Another was a taxpayer doctor who used the RV as a resting area while he was between shifts at the hospital. The courts gave him his mileage from home to the hospital at $.56 a mile.

When you are thinking of taking an RV for a business expense you must establish a very strong case that the RV is a "necessary and ordinary" business expense. That requires some pretty severe documentation so be aware that it's not nearly as simple as saying "one of my customers had a drink in my motorhome" as being the justification for a mega deduction.
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