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Old 11-13-2014, 05:03 AM   #1
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RV Loan Interest as Second Home Deduction

In a discussion about using the interest on an RV loan as a second home deduction I was asked about closing costs. I did not understand why there would be closing costs as it is not real estate. The response was that in order to make it tax deductible there would need to be closing costs. So questions -
- Should closing costs be expected, different than what is done with a car loan?
- Is there something that needs to be done to make the RV loan qualify as a second home loan and therefore tax deductible?
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Old 11-13-2014, 05:47 AM   #2
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Never heard the Closing Cost Question. My understanding on Interest is yes.....
"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."

"Generally, home mortgage interest is any interest you pay on a loan secured by your home (main home or a second home)."

Publication 936 (2013), Home Mortgage Interest Deduction
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Old 11-13-2014, 07:03 AM   #3
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To qualify as a second home, an RV must be fully self-contained. That means it must have sleeping accommodations and bathroom and kitchen facilities. I don't think closing costs are part of the requirement.

Closing costs for real estate include things like a title search, loan origination fees, title transfer taxes, repaying the seller for prepaid property taxes, etc. You would not have such fees with an RV. However, with an RV you may have expenses like dealer prep, delivery fee, state license and title fee, loan application fee, notary fee, etc. that get added after your negotiations.
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Old 11-13-2014, 07:10 AM   #4
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when i got my boat ,i asked my tax advisor about it ,she said if you can cook in it ,sleep in it ,and poop in it ,its a vacation or second house and yes you can deduct it
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Old 11-13-2014, 07:13 AM   #5
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while you can deduct the interest like mortgage interest it is not mortgage interest on your return. If you put it in as home mortgage interest you will not have the corresponding tax doc for home interest like you would from the bank from your home. No closing costs are needed
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Old 11-13-2014, 07:13 AM   #6
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Yes it is deductible I've been contacted by IRS twice.
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Old 11-13-2014, 07:30 AM   #7
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So far all the advise you got seems correct. I had a 5er that I claimed interest every year, cook, and poop and sleep its a second home. I did not pay closing costs, it is not real estate.. That may just be additional dealer profit!!!!! ya gotta watch them guys ha
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Old 11-13-2014, 07:37 AM   #8
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Here is the IRS publication:

Publication 936 (2013), Home Mortgage Interest Deduction

Bruce

EDIT: Sorry, I typed toooooo slow, somebody already posted it.
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Old 11-13-2014, 09:51 AM   #9
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You an forget about closing costs - the IRS pubs state no such requirement. Others have already outlined what is needed, so I won't repeat.

I've included RV "secured-home-loan" interest on my 1040 Schedule A for 15 years now and never been asked to provide additional documentation. You do need to fill in lendor info, though, since you will not have the form 1098 from the lendor that normally provides that direct to the IRS. The Schedule A instructions describes what to provide.
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Old 11-13-2014, 10:12 AM   #10
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Rather than dealing with a second home, I mortgaged my stick and brick (which was already paid off) and used that money to purchase MH. Advantages included a substantially lower interest rate than I could get for just a MH and I hold the title to MH. I now have "full" Home Mortgage Interest deduction without the need to do additional claiming.
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Old 11-13-2014, 10:23 AM   #11
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Everyone has given you the proper advice but I would caution you on using the home equity loan to buy an RV. Technically, the limit on home equity loans is $100,000 for the interest to be deductible. You can use the tracing rules to show that you used the proceeds of the loan to purchase a second home (RV) and that may work, depending on the auditor.

Remember that if you do go the route of the RV loan to show the interest on the other interest line on the Schedule A and that will help you to avoid a letter from our friends at the IRS.
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Old 11-13-2014, 12:42 PM   #12
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I do my own taxes (Turbo Tax) and I place the motor home interest on the "Other" line. I include the words Motor Home Loan, name of the lender and the loan number. About every three years, they send a letter asking what the loan is for, rather than look at the verbiage on the return.

Over the years, the IRS has clamped down pretty good on fraud by requiring forms from employers, banks, retirement funds etc. The one item of fraud they miss, is the claiming of interest on second homes (RV's). I wish they would require the banks to produce interest statements on RV loans when requested by the borrower. It would save hassle in the end.
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Old 11-13-2014, 08:05 PM   #13
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The "other" box is the key I think to not getting a call from the IRS. We didn't know about the deduction for the first five years and it wasn't until I called and talked with an IRS agent that I found out about how to do it. I even refilled the previous four years and got a check for each.
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Old 11-13-2014, 08:10 PM   #14
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Our lender has been sending us a form to include with our taxes for years now so I use it and include a copy with our return. Never had a problem or question from the IRS about it.
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