AS Tax Deduction as Second Home

[Michigander]

Sounds more and more completed with each additional post.

[Ag&Au]

Originally Posted by lucymcdog

So, can I deduct the cost of and all the expenses of renovating my 1960 AS if I live in it 2 weeks/year?

No, only the interest paid on a loan using the trailer as collateral.

[TBRich]

Originally Posted by padillab

Sounds more and more completed with each additional post.

Actually, it's fairly straightforward and worth the effort....

[boutdoors]

Just filed my return.

Bank and CPA said it was foolproof. Wrote off all of our interest. Love it.

[JBinKC]

Look into deferring personal property taxes for a year on a new or used tow vehicle and on a new or used camper by taking delivery after Jan. 1. This saved me about $1,500 last year. Sales taxes in Missouri are due when the tow vehicle and camper are licensed but sales taxes are deductible to a certain extent, which offsets the sting somewhat. For prospective owners, don't let the thrill of ownership cause you to underestimate taxes due up-front and later. Taxes and storage costs add thousands of dollars to ownership costs.

[TomR]

Originally Posted by boutdoors

Just got off the phone with the IRS and they said it is deductible as a second home. Just make sure you get your 1098 from the financial institution if it is over $600.

normandgrace,
If your interest was over the $600 your bank is required to submit a 1098 to you and supply it to the IRS.

Exactly...must have a Form 1098 from your bank with your annual interest paid to avoid issues with IRS. Tom R

P.S. 2nd home interest deduction could be one of the "tax reform" items that congress may delete IF they ever get around to tax "reform" TMR

[tkowalyk]

The Interest on RVs has already started be be phased out -- either partially or completely depending on your income level. If you are subject to AMT, the interest on a RV is not deductible.

[Ag&Au]

I am not saying this is for everyone. However one way to keep the interest on an RV loan deductible is to finance it with a home equity loan. In our case, the interest rate was a lot lower also.

Ken

P.S. I am not a CPA or anything even resembling one.
(Unless it stands for Certified Public Annoyance)

[Dan and Liz]

Don't forget to deduct taxes paid with registration -- not the whole amount, just taxes. May take a little research: in CO it's the "Own Tax".

[Dan and Liz]

Okay, folks, here’s the scoop. I hope this adds more light than heat to the discussion:
In 20+ years of preparing taxes, this is the first instance I’ve heard of where the IRS (wrongly) disallowed a deduction of interest on an RV (unless there’s more to this than I know, such as deduction phaseout based on AGI).
You can deduct interest paid on your principal residence and one second residence, which can be an RV or boat as long as it has sleeping, cooking and sanitary facilities. If you have more than one “second residence” (boat, RV or home) you select which one to treat as your second residence on the tax return. You can also deduct points on refinance (generally claimed as mortgage interest amortized over the life of the new loan; different rules apply if you rent out your RV).
The interest must be on a loan secured by your primary or “second residence”. You don’t need a Form 1098, which only applies to mortgage loans (bad advice from IRS), but your lender should provide you a statement showing the interest you paid for the year. (Usually the first statement of the following year shows total prior year interest paid.)
An earlier post says you must live in the RV for at least two weeks of the year. This only applies if you rent it out; if you rent out your RV and don’t live in it at least 2 weeks, you can’t treat it as a second home. (More bad or unclear advice from IRS.)
Despite an earlier posting, you can use the loan proceeds for renovations/repairs/upgrades (or for that matter investments or whatever you wish) as long as the loan is secured by the primary or second residence. You need to be careful of maximum mortgage loan limits, though (generally $1M for married couples or $500K for singles), and fair market value limits for home equity debt. Most of us don’t have to worry about this, but it’s worth checking.
Regarding the phaseout of itemized deductions if you have income above certain limits – that’s true before 2010, but doesn’t apply to tax year 2010 or 2011 returns. 2012? Unknown.
At least as far back as 2007, you could elect to deduct state and local sales tax instead of state and local income tax. The deduction is calculated from IRS tables, plus sales tax on major purchases (motor vehicles, trailers, boats and aircraft). Sales tax paid on lease of a motor vehicle as well.
Also don’t forget the taxes paid when you renew registration. Treated same as any vehicle tax, claimed under other taxes, not RE tax.
If you didn’t claim what you could have in past years, you can file an amended return claiming a refund any time within 3 years from the date your return was filed, or within 2 years of when you paid the tax, whichever is later. A return filed before its due date (including extensions) is treated as having been filed on the due date. Examples: if you filed your 2008 return by the April 2009 due date, you can amend it up to April 15 2012. If you were on extension, you have until October 2012. Amended returns aren’t that hard; it may be worth it.
Normandgrace: it looks like you were treated unfairly. In view of the above, you may want to contact your local Taxpayer Advocate. Go to www.irs.gov and in the search box just enter “Taxpayer Advocate” and you’ll get a list by state. I don’t know how long ago all this happened, but you may also want to amend your last 3 or so years’ returns as well. But I’d use a different accountant …
These are general rules as of today; it seems there are special rules in the tax code for any circumstance … frinstance, if you have a houseboat berthed at a marina that prohibits overnight sleeping – it doesn’t qualify even if it has berthing …
And who knows what our Elected Life Forms may come up with between now and the election? One thing for sure -- it won't be in Prain Engrish.

If someone has questions on any of this, I’ll try to help.
Dan Hemphill, EA
Circular 230 Disclosure
To ensure compliance with Treasury Department regulations, I must inform you that, unless specifically indicated otherwise, any tax advice contained herein was not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or applicable state or local tax law provisions or (ii), promoting, marketing or recommending to another party any transaction or matter addressed herein.

[Dan and Liz]

"The phaseout of the itemized deduction for higher income taxpayers was scheduled to begin again in 2011, but has been delayed so it will now begin again in 2013."

Source: EA Journal, November December 2011

[bike_addict]

Originally Posted by Dan and Liz

"The phaseout of the itemized deduction for higher income taxpayers was scheduled to begin again in 2011, but has been delayed so it will now begin again in 2013."

Source: EA Journal, November December 2011

What's defined as "higher income taxpayers"?

[dznf0g]

Originally Posted by bike_addict

What's defined as "higher income taxpayers"?

These days, it's anybody with a job probably.

[DKB_SATX]

Originally Posted by bike_addict

What's defined as "higher income taxpayers"?

I'm not sure if it's changed since the "old" pre-2010 system for reducing itemized deductions for high-income taxpayers, but that system started to reduce the amount you could deduct when adjusted gross income was a little over $166k, and then ones deductions were reduced by 1/3 of 3% of the amount of AGI above $166k. (So, if your AGI was 266k, your deductions would have been reduced by 0.3x$100k/3, or $1,000.) I *think* those figures are for single filers, with higher limits for couples filing jointly, but I didn't find info about that distinction.

[Dan and Liz]

I think Il Carriago has a pretty good explanation. If our elected life forms restore this phaseout for 2013, they'll put out the numbers down the road. That could be before or after the effective year starts -- they've done things retroactively before. It wouldn't be good politics for them to do it before the 2012 election, so I'm not counting on anything being done earlier.

"High income?" Maybe the old numbers adjusted for inflation; more likely some random figure they can agree on.

Dan

I am proud to be paying taxes in the United States. The only thing is, I could be just as proud for half of the money.
— Arthur Godfrey

[Dan and Liz]

Is thread might be worth reviewing for some. The higher-income deduction phase outs are back.

[StreamGlider]

Originally Posted by TBRich

Actually, it's fairly straightforward and worth the effort....

Only worth it if you exceed the standard deduction.

We included the sales tax on ours AND the interest paid and didn't meet the ustandard deduction- so it was all for naught. We need more deductions!!!!