Friday, January 7, 2011

RV as Principal Residence

Q:  In Oct 2009 I purchased a motor home for cash.  I had read online that their were some deductions available as this is our only home.  I asked my tax preparer to research if I was eligible for a deduction on my motor home as a Principal Residence.  His answer was in the negative but I still am not entirely sure he was right.  I will take your answer as final!  AR, Arizona

A.  You may have read about The American Recovery and Reinvestment Act (P.L. 111-5) which was enacted to help stimulate the purchase of a new home as a Principal Residence. Since RVs are wheel estate and not real estate, they don't qualify - but I sure wish they did!

The usual deductions allowed are mortgage interest (which didn't pertain to you), personal property taxes, and sales tax, but only if you don't deduct state income taxes.The standard deduction may well have been higher than the sum of all the items that go on Schedule A. This should be easy for you to check.

Tax Tip:   For 2010 there is a new special deduction for sales tax on a new vehicle. You can fully deduct the sales tax paid on the purchase price up to $49,500. As an example, if you purchased your new RV in an area with a 9% sales tax rate, the tax on the first $49,500 would be $4,455, This could mean it may be worth the extra effort to file a Schedule A rather than taking the standard deduction as the combined total of your medical, interest, taxes, and charity may be higher than the standard deduction in 2010.

No comments:

Post a Comment