Whether you’re putting the finishing touches on your 2023 taxes, or you’ve submitted an extension and you’re just starting to pull together what you need to file, understanding the impact of RV ownership on your taxes is important! It’s never too late to get started, especially if you think you might want to tread the time-consuming path of claiming itemized tax deductions.
And, if you’re reading this article, it’s probably safe to say that you’re interested in the RV life. You might have even landed here because you bought an RV in 2023 and wonder what kind of tax benefits are available for your purchase. If you are one of the many new RV owners out there, then this article is for you.
Let us start by saying that it’s hard to imagine two more opposite topics to discuss than the thrilling call of the open road and the hair-pulling task of calculating potential tax deductions on the vehicle making those bucket-list adventures happen.
The only silver lining is determining how to save as much money as you can on RV tax deductions and hopefully get a bigger return. Thankfully, there are several types of deductions that your RV may qualify for, and we’ll take a look at those in this article.
However, keep this in mind as you read:
As we walk you through potential tax savings, remember that if your standard 2023 deduction is more than your itemized deductions, you’ll do best to stick with the standard deduction.
In fact, according to the Tax Policy Center, only about 31 percent of taxpayers choose to itemize. And, in 2017 the Tax Cuts and Jobs Act was signed into law, nearly doubling the standard deduction for individuals and married couples to $12,400 and $24,800. For the 2023 tax year, the annual inflation adjustments bring the standard deduction even higher. The IRS explains, “The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.”
What classifies as an itemized deduction? State and local taxes, mortgage interest, charitable contributions, student loan interest, and medical and dental expenses are just a few examples.
Still, whether or not you find enough deductions to make it worth your while to itemize, it’s helpful to understand how your recreational vehicle can benefit you come tax time.
We’ll consider four types of potential tax deductions for your RV:
Mortgage Interest Deduction
Sales Tax Deduction
Local and State Property Tax Deduction
Business Tax Deduction
Mortgage Interest Deduction
You’re probably familiar with claiming a tax deduction for your home’s mortgage interest ($750,000 cap on principal). You may also know that you can deduct the interest you pay on an RV, either as a primary home if you live in your RV full-time or as a second home if you’re an RV part-timer.
The IRS’s Publication 936 states: “A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.”
This means that your RV could qualify as a first or second home, allowing you to claim the interest on your loan, as long as it has a bed, a kitchen, and a bathroom.
Please note that you can only claim deductions on a secured loan, where the RV serves as collateral. You cannot enjoy these tax benefits if you purchase your RV with cash, credit, or personal loan.
A few additional details:
- If you live in your RV full-time and decide to return to a more traditional home, your RV can qualify as a secondary residence, and the same deductions would apply.
- You can claim an interest deduction on a second home even if you don’t use it during the year. This means that you could leave your RV in storage for the entire year (but why would you want to?) and still apply the interest deduction on your taxes.
- If you have a fifth wheel or travel trailer, your tow vehicle’s interest will not be deductible as home mortgage interest. Neither will any towed vehicle for a Class A or Class C motorhome. However, the interest on the RV itself remains deductible.
For more information on the home mortgage interest deduction, see the IRS’s Publication 936: Home Mortgage Interest Deduction.
You May Not Get a 1098 Form
If you claim a mortgage interest deduction on your RV, keep in mind that you probably won’t get a Form 1098 (Mortgage Interest Statement) from your lender.
- If you do receive a 1098, then you’ll report this on Schedule A, line 8a.
- If you don’t receive a 1098, then you’ll report this on Schedule A, line 8b.
- You’ll need to provide your lender’s information, including their taxpayer identification number.
- If this isn’t provided on your lender’s statements, then you’ll need to request that they send you a completed Form W-9.
- You could be subject to a $50 penalty for each failure to report correct information without this information.
Sales Tax Deduction
Sales tax on large purchases like home remodeling, boats, and cars is often tax-deductible — and this can include your RV. The best part about this deduction is that you can deduct the sales tax even if you paid cash for your RV or boat. Note that this is a one-time-only deduction, but it can be a substantial sum that could help push you past your standard deduction threshold. For example, in Texas, sales tax is 6.25%, but according to the Texas comptroller, “but local taxing jurisdictions (cities, counties, special-purpose districts and transit authorities) also may impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent.”
But there are several important caveats to consider. On your federal tax return, you have to itemize to qualify for the sales tax deduction. You also have to choose between deducting general sales tax and deducting local or state income tax. If you paid more in local and state sales tax than you did in local and state income tax, you should choose to deduct the sales tax. You cannot deduct both. According to the IRS, “As an individual, your deduction of state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately). You may be subject to a limit on some of your other itemized deductions also.” “Please refer to the Instructions for Schedule A (Form 1040) and Topic No. 501 for the limitations.”
Of course, if you live in one of the five U.S. states that don’t have sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), then you won’t be eligible for this deduction category. But that’s a small price to pay since you get to enjoy no sales tax year-round!
Local and State Property Tax Deduction
If you live in Texas or another one of these 23 states (plus the District of Columbia), then you will pay nothing at all in state vehicle property (or ad valorem) taxes when you purchase a vehicle.
If you live in any other state, you’ll pay an ad valorem tax on your vehicle (deductible on Schedule A) — which essentially means that you’ll pay a small tax that varies in percentage based on the value of your vehicle. The tax rate varies from state to state, ranging anywhere from .1% in Louisiana to more than 4% in Virginia.
You may deduct up to $10,000 ($5,000 if married and filing separately) for a combination of property taxes and either state and local income taxes or sales taxes.
While some RV owners live in states, like Arizona, that require residents to file state income tax returns, others do not. Residents of certain U.S. states, including Texas, don’t have to file state income tax returns, because there is no state income tax. So, residents of states without income taxes will only need to consider deducting vehicle property tax when filing their federal tax returns.
Business Tax Deduction
If you use your RV to run a business, including renting it out, you may be able to claim a business use deduction. Here’s the breakdown of benefits to be gained based on whether you use your RV solely for business, a mix of full-time living and work, or mixed personal and business use.
RV Used Solely for Business Purposes
If you use your RV solely for business purposes, you can write off many associated expenses. In fact, the entire RV may qualify as a business deduction. However, you may be ineligible for this deduction if you use your RV for personal travel. Using it just once for personal use could disqualify it as a business deduction. To be safe, you’ll definitely want to discuss the specifics with your tax advisor.
Full-Time Living and Working from Your RV
A number of full-time RVers make a living from the road. With relatively easy access to the Internet, digital nomads can enjoy the perks of a mobile office as they explore new or familiar destinations. If you’re one of these lucky ones, then you may be able to deduct certain business expenses, depending on what they are and if they’re used only for business purposes.
Mixed Personal and Business Use
More and more RV owners are renting their RV out for others to use, making this option one of the most popular part-time ways to recoup any part of your RV investment. There is opportunity to take tax deductions on depreciation, rental management company commissions, advertising fees, insurance, cleaning, and other maintenance.
If you do join the many RV owners who rent out their RVs, then you’ll want to keep meticulous records of the number of nights you rent out your RV versus using it for yourself. This level of detail could be handy come tax time. 
And, this is important: If you plan to claim a home mortgage interest deduction on your RV, then you must use it as a home for at least 14 days, or more than 10% of the days it was rented out, whichever is more. Otherwise, you will lose this deduction; however, you may be able to claim deductions associated with rental or business property.
To learn more about how your RV might qualify as a residential rental property, see the IRS’s Publication 527 on Residential Rental Property.
Final Thoughts
Purchasing an RV is a significant decision, similar to purchasing a car or vacation home. If you’re in a position to buy a discretionary item like an RV, then you’re probably a savvy saver on some level. This means that you’ll want to take advantage of any tax deductions that you can, and the savings can go toward your RV’s associated expenses.
Just remember: You’ll only want to itemize if your total deductions are more than the standard deductions.
We do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors.