Taxes and RVing - RV-Dreams Community Forum

tallan · RV-Dreams Family Member

Taxes and RVing

Ken & Sarah · RV-Dreams Family Member

My accountant told me know because it is mobile. If you are going to park it in one spot, take the wheels off it and tie it down so it can't be moved you might be able to justify that. I tried but was told no since we are going to be on the move.

Howard · Host

Opinions may vary, but my answer is "no". Here is the text of part of a Journal entry I wrote on this topic.

Can You Purchase An RV To Full-Time In And Take The First-Time Homebuyer Credit?

Well, some RV websites and forums are saying "yes". I happen to disagree, and I'll explain why. Of course, I'm just a regular dude, and this is just my opinion. So my disclaimer is to advise you to talk with your tax professional.

Why is this even an RV discussion?

Good question. You would think that the "First-Time Homebuyer" thing would end the discussion for most. However, it doesn't.

The First-Time Homebuyer Credit has three basic versions and applies to homes bought after April 8, 2008 and before May 1, 2010.

For homes bought in 2008, the credit was for first-time homebuyers. You could get up to a $7,500 "credit" which was actually a dollar-for-dollar reduction in your taxes which could result in a refund. However, that credit was basically an interest free "loan" and had to be paid back over time. The credit had to be taken on the 2008 return and then it is recovered on future returns.

For homes bought by first-time homebuyers in 2009, up to November 7, the credit was up to $8,000 and does not have to be repaid (with some exceptions). That credit was for first-time homebuyers defined as "new home owners that have not owned a home in the prior three years". That credit could be taken on either the 2008 or 2009 return for a 2009 purchase.

Then the law was modified to extend a credit to "new home owners" that were "long-term home owners" buying new-to-them homes after November 6, 2009 but before May 1, 2010. Suddenly, there was a credit for those that aren't just "first-time homebuyers". The credit is up to $6,500 and does not have to be repaid (with some exceptions). A long-term home owner is defined as someone that has owned and used the same principal residence for at least five consecutive years in the last eight years. That credit can be taken on either the 2009 or 2010 return for a 2010 purchase or on the 2008 or 2009 return for a 2009 purchase.

Sheesh.

Okay, so the RV discussion arises from those that have owned a house for a long time and wanted to purchase an RV as their new home. Once the long-time homeowners were put into play, those planning to full-time are seeing an opportunity to buy an RV prior to May 1, 2010 and take the credit. After all, the credit applies to the purchase of a "Principal Residence" doesn't it?

Not so fast buckaroo! :)

The First-Time Homebuyer Tax Credit isn't so clear on that. Tax code provisions don't necessarily use the same definitions, so we can't just use the definition of "Qualified Home" from the Mortgage Interest deduction provisions which do consider an RV a "Qualified Home" for the purposes of deducting loan interest.

The First-Time Homebuer Tax Credit clearly applies to "conventional" homes and to mobile homes, but it is not clear as to whether it applies to a travel trailer/fifth wheel or motorhome. I suppose it can be argued that it does apply, but there is evidence that RVs, unless affixed to real estate, don't qualify.

In the questions and answers section on the IRS site there is one question directly on point:

Q. Can a taxpayer who purchases a travel trailer qualify for the credit?

A. A travel trailer that is affixed to land may qualify as a principal residence.

The strict view, in my opinion, is that knocks out travel trailers and fifth wheels unless they are affixed to real estate. A more expansive view might, if I wanted to take a little risk, lead me to take the credit IF I had real estate with a physical address to put the trailer on. But I doubt I would take that risk.

Another question is not quite so "on point", but it does provide some insight.

Q. Can an individual who has lived in an RV qualify for the credit?

A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.

Now, that question is relevant to RVers in that it clearly indicates that a full-time RVer who has been full-timing three years or longer, can buy a house before May 1, 2010 and be considered a first-time homebuyer.

However, by also clearly stating that a motorhome doesn't qualify as a "principal residence", I think it's a pretty easy jump to say the purchase of a motorhome would NOT be eligible for the credit since it would be considered personal property and not a principal residence.

So, for those that want to buy an RV and take this credit, you won't do it with a blessing from me. Get that from your tax professional who you can take to court later if necessary. :)

There's my "shot at it". smile

tallan · RV-Dreams Family Member

Thanks so much for your your research and info!