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wnytaxman · 12-18-2017, 11:06 AM

This post is meant to inform my fellow RVers, not to generate some political debate, so please NO political comments. If you have questions I'll do my best to answer them.

The 2018 tax changes that will come up for a vote have several changes and non-changes that will have an effect on those of us who RV. The deduction for second home interest appears to be safe, but with modification. The limit on mortgage interest is now on principal of up to $750,000. That would appear to create a limit for some. Let's say you have a $500,000 mortgage on your house and a $400,000 motorhome loan, you would be faced with losing part of the deduction for the motorhome interest.

There will be a very limited amount of state and local taxes available for deduction. That limit is no more than $10,000 made up of any combination of sales taxes, income taxes, or real estate taxes. If you have had more than that in the past for an itemized deduction, then you will be limited to using that excess. We are telling our clients that if they will owe state tax for their 2017 taxes to make the payments before the end of the year to take advantage of the deduction.

It appears that the energy credits will still be available in 2018. So if you added solar in 2017 or will add solar in 2018, you will still be able to take the tax credit.

These are the changes that I have seen that would seem to have the greatest effect on RVing.

Logan Oregon · 12-18-2017, 11:11 AM

i'm glad that it looks like the solar incentives are staying intact. I plan on adding solar in 2018. No debt, including our new unit on order, so I couldn't itemize to save my soul. Investments have rebounded and are heading to new heights. Not a lot of change for me in the plan, but I see some changes coming for our kids.

wa8yxm · 12-19-2017, 07:24 AM

This new tax bill is so complex I do not think anyone knows what all it says. parts of it can not even be read being hand written poorly.

Till experts figure it out (Assuming it gets passed) we won;'t know what it says I fear..

wnytaxman · 12-19-2017, 07:31 AM

Quote:

Originally Posted by wa8yxm

This new tax bill is so complex I do not think anyone knows what all it says. parts of it can not even be read being hand written poorly.

Till experts figure it out (Assuming it gets passed) we won;'t know what it says I fear..

The provisions I've cited are the ones that appear to be safe so far. You are correct in your comments about the complexity. I just went through a brief summary of the business provisions and they are incredibly complex.

Frutza · 12-19-2017, 07:33 AM

Does that mean the energy credit ending after 2018? Or not on the table yet?
Also, what changes for fulltimers?
Tks

wnytaxman · 12-19-2017, 10:47 AM

Quote:

Originally Posted by Frutza

Does that mean the energy credit ending after 2018? Or not on the table yet?
Also, what changes for fulltimers?
Tks

From everything we have seen the energy credit will continue past 2018. However, if there is a change in the make-up of Congress at the next election that picture could change. As with anything in tax, permanent means until Congress changes it.

Probably the biggest thing for full timers will be the increase in the standard deduction. Many full timers use Texas and Florida for the states of residence. Those states have no state income tax so most full timers would use the standard deduction which will now go to $24,000 for a married couple. That change could save about $1,800 for a couple in the 15% bracket.

cruzbill · 12-19-2017, 10:59 AM

I think most of us are in the 15% effective rate, not marginal bracket, correct?

Frutza · 12-19-2017, 11:04 AM

As with anything in tax, permanent means until Congress changes it.

Thanks

wnytaxman · 12-19-2017, 11:32 AM

Quote:

Originally Posted by cruzbill

I think most of us are in the 15% effective rate, not marginal bracket, correct?

The "new" 12%, formerly 15% bracket, goes to taxable of $77,090 for a married couple filing jointly. The next bracket is 22% and that caps out at $165,000. Most of us would fall into those two brackets I would assume. Taking into account the standard deduction of $24,000 would be a gross income of $101,090 for the 12% bracket and $189,000 for the 22% bracket.

Badlands Bob · 12-20-2017, 10:03 AM

Since the kids have graduated from college and become gainfully employed and we finally got everything paid off, we haven't had enough deductions to itemize the last 2 years. I haven't run any numbers yet, but doubling the standard deduction has got to help us.

If a person has a $500,000 home mortgage and a $400,000 motorhome loan, I don't think losing part of the interest deduction is going to make much difference.

cruzbill · 12-20-2017, 10:16 AM

question: much coverage about parts of the tax law 'expire' in 2020 or '25 or whatever. Don't know if that means middle class tax brackets will shift, std deduction change or what. They say congress will 'likely' reauthorize the cuts for middle class 'down the road'. Must be talking about tax brackets (marginal rates) returning to where they are now after a few years for use in the middle??

wnytaxman · 12-20-2017, 10:33 AM

Quote:

Originally Posted by cruzbill

question: much coverage about parts of the tax law 'expire' in 2020 or '25 or whatever. Don't know if that means middle class tax brackets will shift, std deduction change or what. They say congress will 'likely' reauthorize the cuts for middle class 'down the road'. Must be talking about tax brackets (marginal rates) returning to where they are now after a few years for use in the middle??

Bill, parts of the law are supposed to expire in 2025, but, and this is a really big but, once we have another shift in Congress the law will get changed. I'm sure that much of this law will only apply to 2018 and 2019 and then the pendulum will swing again. We all got excited in the early 2000's by permanent changes in the tax law only to see the law change over and over during the subsequent years. In simple terms I don't expect the expiring provisions to actually last long enough to expire.

oakcreekeric · 12-20-2017, 10:34 AM

Silly/Stupid question - IF this all passes.. it won't change until 2018, correct ?

So, does that mean the taxes I file in Jan/Feb/March won't be effected ?

wnytaxman · 12-20-2017, 10:42 AM

Quote:

Originally Posted by oakcreekeric

Silly/Stupid question - IF this all passes.. it won't change until 2018, correct ?

So, does that mean the taxes I file in Jan/Feb/March won't be effected ?

Eric, there isn't anything that will change in 2017. All the changes will be in '18. If you usually pay state taxes when you file your federal, you may want to pay them now. If you are in the AMT then it probably won't help you to reduce your federal taxes.