Tax breaks/credits for RV conversion?

[Putts]

Searched around and didn't find what I need here in the forums.  Feel free to point me off in the right direction if I missed it.

From what I gather, you can get tax breaks on a second home...an RV in this case. What I'm wondering is if I can somehow get a tax break while I'm building my stepvan into an RV? Currently, it's a registered as a commercial vehicle, I bought it 18 months ago, but will be re-registered next month as an RV. The vehicle is financed and cost $16k, pay off in 1 1/2 years from now. I've put maybe $5k into it already. By the time I'm done two-three years from now I'll have $15-$20k into it beyond the base price of the truck for a $30-$40k total.

What I'm looking for is any advice on how I might get various tax breaks/credits for the time/money spent on the vehicle. It will be my full time home 2 years from now. I'm also wondering if there's any way when I sell my current house to move proceeds over to the truck without capital gains tax as I'll be spending at least $10k at the point for all sorts of stuff to finish up the build. 

I suppose the best thing for me to do is retain a tax accountant, but I figured I'd ask the tribe before I got started down that rather expensive road. The short term cost may have a long term payoff, but short term I'd rather be putting the dough into the truck. 

Thanks for any advice you might offer!

 

[AbuelaLoca]

I know nothink... but I did find this... perhaps it can take you down the proper rabbit hole that is the I R S

http://www.bankrate.com/finance/taxes/tax-deduction-on-rv-home.aspx

 

[Optimistic Paranoid]

Chris and Cherie of Technomadia live full time in an RV and run a couple of businesses out of it.  They mention it towards the end of this article on banking, finances, and taxes, and have pointers to several good info sources.  Unfortunately, they also reference a recent court case that they say makes it more difficult to write off the RV as a business expense if it's also used for personal pleasure more than 14 days a year.

Anyway, check out this article:

http://www.technomadia.com/2014/09/money-banking-taxes-and-finances-for-the-full-time-traveler/

 

[tx2sturgis]

I'm also wondering if there's any way when I sell my current house to move proceeds over to the truck without capital gains tax...

Wait...what?

Will your house sell for over $250,000?

As a single guy, you get that much in gains, tax-free, from the IRS.

As always, do your 'due diligence' but unless your sale price is way over that, the gains should not add up to a huge amount.

Call up your tax person of choice, they can fill in those financial details.

 

[John61CT]

May 2017 average home price in the US was $406,400

 

[tx2sturgis]

May 2017 average home price in the US was $406,400

But Dart's servant lives in Montana or somewhere...ok...maybe...I dont know.

But doing the math, shedding a $400,000 home with $250,000 of it non-taxable, then rolling some level of write-off over to a $40,000 build...not gonna work out I dont think.

But, all tax advice here is worth exactly what the reader had to pay for it...

 

[Putts]

Cool. I bought it for $285K and it'll sell for less than $400k with maybe $185 left on the note, so it looks like I'm in the clear there. Thanks, had no idea of the $250K threshold. Obviously I'm not a money guy.

Bozeman MT, by the way. Any body needs a pit stop feel free to PM me.

 

[CautionToTheWind]

I need a tax break from the heat. Is that still on topic? lol Never been to Boseman; being from ND (no longer there), that's a surprise to me.

 

[tx2sturgis]

Dart, get daddy to read this:


https://www.irs.gov/taxtopics/tc701.html

and this:

http://americantaxservice.org/capital-gains-and-your-home-sale/

 

[Putts]

Thanks, Brian, looks like I'm in the clear to pocket all the money from my home sale....WOOOT!

Another tax break is installing a solar system in your RV...well, dwelling unit. Your dwelling unit must have toilet, bed, and cooking facilities. (IRS definition of a dwelling unit)This is a tax credit so it directly reduces the amount of tax you have to pay. 

From here:

30% for systems placed in service by 12/31/2019
26% for systems placed in service after 12/31/2019 and before 01/01/2021
22% for systems placed in service after 12/31/2020 and before 01/01/2022
There is no maximum credit for systems placed in service after 2008.
Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
The home served by the system does not have to be the taxpayer’s principal residence.

No maximum credit means there's no cap on the credit.  Put in a $20,000 system, get $6000 back.  (Can I camp near you and charge my batts?)

I think most of you all know this one, but...

Since you RV is a second home you can also claim an interest deduction on any loan payments made for the vehicle. Looks like the loan must be secured by the vehicle, however...not sure on that, better check with your tax man.

This page has some good info. It does mention that the sleeping, toilet, and cooking facilities must be permanently mounted to qualify.

 

[Putts]

Upon further cogitation on what's covered by a "Dwelling Unit", here's the definition again:

Dwelling unit.   A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. It also includes all structures or other property belonging to the dwelling unit. A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities.

  A dwelling unit does not include property (or part of the property) used solely as a hotel, motel, inn, or similar establishment. Property is used solely as a hotel, motel, inn, or similar establishment if it is regularly available for occupancy by paying customers and is not used by an owner as a home during the year.

So, I wonder if you pull a trailer with your RV if it's considered "property belonging to the dwelling unit" and may therefor have similar tax status?

And what about the toad?  (Doubt it, eh?)

 

[Weight]

What I can deduct from my federal income tax. Property Taxes. Interest on a mortgage. One time cost of solar installation. I can't see the first two amounting to much for an RV. Can you get a mortgage on a RV? Do you pay property taxes on the RV?

 

[Weight]

You can get a loan secured by the RV you buy from a RV seller. I don't see how you can get a loan secured by the RV you have built in stages. Non of the money is secured by a note on the RV.

 

[tx2sturgis]

Thanks, Brian, looks like I'm in the clear to pocket all the money from my home sale....WOOOT!

I'm thinking you owe me a BEER!

 

[Putts]

Can you get a mortgage on a RV? Do you pay property taxes on the RV?

Hm. I wonder if the registration fees are deductable?

You can get a loan secured by the RV you buy from a RV seller. I don't see how you can get a loan secured by the RV you have built in stages. Non of the money is secured by a note on the RV.

I'm thinking I will go to a tax accountant and check some of this stuff out and will report back. But I'm hoping that I can at least claim the interest on the vehicle loan. It's currently a commercial vehicle, but I should be able to re-register it as an RV next month. I'm hoping that I can then go back and claim all the interest on the loan as a deduction. *crosses fingers*

I'm thinking you owe me a BEER!

That's at least two I owe you.

 

[tx2sturgis]

That's at least two I owe you.

Add a Jim Beam and Cola and I might just make the drive up there to collect!

 

[7wanders]

Thanks, Brian, looks like I'm in the clear to pocket all the money from my home sale....WOOOT!

Another tax break is installing a solar system in your RV...well, dwelling unit. Your dwelling unit must have toilet, bed, and cooking facilities. (IRS definition of a dwelling unit)This is a tax credit so it directly reduces the amount of tax you have to pay. 

From here:

30% for systems placed in service by 12/31/2019
26% for systems placed in service after 12/31/2019 and before 01/01/2021
22% for systems placed in service after 12/31/2020 and before 01/01/2022
There is no maximum credit for systems placed in service after 2008.
Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
The home served by the system does not have to be the taxpayer’s principal residence.

No maximum credit means there's no cap on the credit.  Put in a $20,000 system, get $6000 back.  (Can I camp near you and charge my batts?)

I think most of you all know this one, but...

Since you RV is a second home you can also claim an interest deduction on any loan payments made for the vehicle. Looks like the loan must be secured by the vehicle, however...not sure on that, better check with your tax man.

This page has some good info. It does mention that the sleeping, toilet, and cooking facilities must be permanently mounted to qualify.

Putts is correct. your tax break on an RV from the interest on the loan payment and is the same as that when you pay a mortgage (and not from the costs of converting a van into an RV). the loan interest you pay when financing your 2nd home (the RV) is deducted from your income. normally you are paying almost entirely interest in the first few years of a mortgage and so the entire amount of payment can be subtracted from your income. I'm not familiar with solar credits, but happy to learn about them. 

ps. I had a meeting two weeks ago with my CPA trying to see if I could write off my step van RV conversion documented on youtube as a youtube video expense. his answer was long and complex. in theory, it could be deducted, but in reality it would be a big red flag for the IRS

 

[John61CT]

Maybe have an entity other than yourself buy the platform, pay for the build and fitout, then you just get a loan for the full value when you buy it as is all finished.

Not talking a falsely inflated value, basically materials costs, lowball the self-labor value if any.

 

[Putts]

ps. I had a meeting two weeks ago with my CPA trying to see if I could write off my step van RV conversion documented on youtube as a youtube video expense. his answer was long and complex. in theory, it could be deducted, but in reality it would be a big red flag for the IRS

Yup. My understanding is that if you live in it without working for more than 14 days a year you can't write it off.  It's similar to home office write offs...if the space is used for almost anything else than work for any length of time you can't write it off.

 

[Putts]

Add a Jim Beam and Cola and I might just make the drive up there to collect!

Geez, you're a cheap date. I'll throw in burgers as well.