Towable RV owners lose benefit with new tax bill

Towable RV owners lose benefit with new tax bill

The recently passed tax reform bill will benefit the RV industry and further the industry’s current period of historic growth, according to the Recreational Vehicle Industry Association (RVIA).

Buy this, but forget about interest tax deduction.

But one thing it won’t do is help the owners of towable RVs. For many years, owners of all types of self-contained RVs could deduct the interest on their RV loan as a second home. The new tax will allow a deduction of interest on mortgages up to $750,000, for purchases of first and second homes, which can include RVs, but only motorized ones.

The new law only allows deduction for “any self-propelled vehicle designed for transporting persons or property on a public street, highway, or road,” which does not include towable RVs such as travel trailers and fifth wheels. 


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RVIA says it will work with the House Ways and Means Committee and the Senate Finance Committee to include a change to the definition in a technical corrections bill which will likely be needed next year as other oversights and unintended consequences become known.

But, for now, if buying a towable RV is in your plans, don’t count on taking a tax deduction on the loan interest. If you already own a towable RV and have been deducting the interest, contact your tax professional to learn how this applies to you. 

Read the current issue of the RV Travel Newsletter.

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37 thoughts on “Towable RV owners lose benefit with new tax bill

  1. Jason B

    The Article is factually incorrect.

    The RV 2nd Home Mortgage Deduction did not go away under the tax law changes for 2018. That is pretty much the same as it haw always been, except that the limit for both your home and 2nd home is $750K. Applies to both Motorhomes and travel trailers as 2nd home deduction.

    The author confuses the floor plan interest deduction that RV travel trailer dealers have used in the past to deduct from their business taxes, with the consumer 2nd home mortgage deduction. Completely different deduction, and impacts the business owner, not the consumer. Yes, hopefully this option will be fixed in the future, but this article is factually incorrect.

  2. Wolfe

    Transfer your towable loan to a home equity loan at generally lower, and deductible interest. I’ve been told you shouldn’t put depreciables on HELOC, but the numbers may work for some people.

    1. Ed

      Under the new law home equity loan interest is not deductible. Also I still have found NO confirmation on the statement that interest on a loan for a toawalble is not deductible. I would have to say the article is mistaken.

  3. Gary Sain

    We looked at our tax numbers last night. With the new individual standard deductions, we’d get about $4k more in deductions with the new std. deductions, vs. what we got itemizing in “16. We’ll come out ahead overall, all other things being equal.

  4. Ed

    I have gone through this tax law and nowhere can I find this limitation. I would really like to see where this information comes from because this newsletter is the only place I have seen this. To add to the confusion, the quote would indicate that ONLY motorhomes would qualify which would eliminate ALL other second homes.

  5. Abby

    Most of the critters in DC wouldn’t know a fifth wheel from a giraffe. The tax plan will benefit most Americans in one way or another, either personally or in the growth of businesses for new jobs and services. I don’t know too many Rv people that bought their rig for the tax deduction, but it was a nice perk if you could use it. We have a Class A so I gave no dog in this hunt, but both my husband and I got raises and bonuses, so it’s good for us.

  6. Patti

    I guess we will all have to see how it all shakes out after this tax season. Contact your representatives and let them know your concerns…it won’t do any good really since none of them pay much attention to us, but it is a way to at least vent some frustration. Meanwhile, remember this doesn’t take effect until the 2019 tax season and we could all be wiped out by an asteroid before that. 🙂

  7. jrw

    Would I have bought a new 5er this year knowing this,,, not at all.

  8. Bobo

    Ummm? The point you are missing is that one reason people buy these things is cause they can use the deduction. Overall taxes don’t matter in individual decisions. This will adversely effect the industry when folks make different decision on what to do with their $$ Values will go down on new and used units. Simple math.

  9. Ross Reed

    Some of you people have obviously not read the very boring piece of legislation cover to cover. As with any bill to get something really worthwhile you need ro be prepared to have some sort of bone to toss to the other side. I’ve had 14 different RV’s since the early 70’s 5 of them bought new. As a couple of people have noted those deductions made very little to no difference. As an ex small business owner for over 25 years in the not friendly business of California I can tell you overall it’s very good.

  10. Dwayne

    Those in the top 20% income percentage currently pay somewhere between 8 – 95% of the federal income taxes. Although I am nowhere near that income level I sure have no problem with them getting a larger tax break.

    I have more difficulty with the bottom 45-50 percent incomes paying little, nothing or even getting a ‘rebate.’ Everyone in this great country should pay a little in federal income taxes.

    1. Dwayne

      Oops, I obviously made a typo…should read 85 – 95%

  11. Roger M.

    Yup tax calculation just became more complex not simpler, and certainly, we will never see the “postcard” return the president was showing. What is going to happen in a few days is the “PAYGO” tax provision kicks in and Medicare will get hit by $25 Billion cut.

    1. booneyrat

      I also read where they are after some cuts in VA,which goes against what we were all promised.

  12. Robert Pulliam

    This comment has been removed for offense references to politics and religion.

    1. Earl

      I always use all the forms and pick the one that gets me the most refund.

    2. jrw

      So true! Thanks for stating the obvious.

    3. Bill

      What do disabled people do when they are solo you get nothing

  13. David

    From my view point this is a non issue. I am speaking as one who owns and tows a travel trailer and as one who has done income tax preparation and taught the class on tax returns. First to deduct interest you must file a form 1040 schedule A. Second you must have more itemized deductions than the standard deduction. Yes I did deduct the interest for a few years but as the standard deduction went up and my mortgage and RV interest went down I no longer can itemize on my federal return. Since most people on a schedule A can claim charitable contributions, mortgage interest, and state income or sales tax. The rest of the deductions are limited out based on % of AGI and with the standard deduction in 2016 of $12600 I suspect quite a few RV owners could not claim any interest deduction. So lets look at how a loan on $50,000 RV shakes out. Allow $5000 down and a sales tax of 9%, term 180. The first year you pay $2400 interest, $2184, $2056, $1921, $1779, $1629 over the next 5 years. SO the math says $12600 – 2400 = $10,200 for the other deductions. Now we factor in the increase in standard deduction to $24200. OH MY I loose $2400 in deduction but get $12,600 increase in standard deduction. Looks like I gained $10,200 in deduction and don’t have to file that pesky schedule A. As I said A NON ISSUE, you are not loosing a thing money wise.

    1. Bob K

      This may be a non issue for you, but for many of us who’ve recently purchased new 5th wheelers for close to 100 thousand dollars, that tax deduction will be felt.

      1. Jeff

        You Won’t feel it! Unless you have a high interest loan!

    2. Jeff

      I agree with DAVID, it’s really a NON-Issue for Towable owners. The little bit of benefit you get from deducting interest is not worth filing the 1040 A, unless you have a Bucket Load of other deductions.

      I put the interest down anyway, but I usually don’t get a Nickle in benefit and I am also a Home Owner. My RV cost over 100K too. It is financed at 3.9 %, so there is very little interest paid anyway.

      Now if you have a SUPER HIGH End 5th wheel, say one of those super fancy 200K Plus units, you will probably lose on the deal. But, not many of those units are being sold.

    3. Lynn Decker

      Where do you find a $50 K motorized RV? Once again, the rich win out because they are the ones that purchase the $100K to $500K motorized RVs. It is the middle class that purchase the $50K towable.and fifth wheels. Again the middle class get screwed over.

      1. Jann

        Lynn I agree with you. Guess the “Christmas Present” here is not a present and what might have been good will go away in a few years, except of course for corporations.

        All will be quiet until “they” decide to come back to Washington DC and for more tweets.

      2. GeorgeR

        How do you lose out? Unless you have been able to deduct an additional $12,600 (the amount the standard deduction increases) using your RV’s interest in the past, you will come out ahead.

      3. jrw

        True and some 5ers cost more than many MHs,

  14. Mark S Holly

    Again, this seems to benefit the wealthy more than us middle class folks. In a few more years we’ll be paying for the tax benefits of the top 20%. I know how I will be casting my votes in the future…

    1. Bobo

      Ummm? The point you are missing is that one reason people buy these thing is cause they can use the deduction. Overall taxes don’t matter in individual decisions. This will adversely effect the industry when folks make different decision on what to do with their $$

      1. GeorgeR

        In my nearly 40 years of RV’ing, I’ve never come across anyone who stated they bought their RV because they could get a tax deduction on the interest. Actually, I’ve only found a few that could even use the deduction, and they bought the RV they did because it is what they wanted and could afford. Although I have been able to use the deduction a few times, by far most years I haven’t. I would much rather have the $12,600 personal deduction increase.

        1. Marcia

          Couldn’t agree more!

    2. jrw

      Thank you~~ great thinking!

    3. Ann Payne

      Think of this, most rich that pay for high end motor coaches. They don’t do loans, they pay cash.

  15. Dave

    The tax cuts savings far outweigh this issue.

  16. Bill

    Why does it look like an author or conference committee member has a very large motorhome that has a very large loan on it…..

    1. Debbie

      Sadly not surprised.

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