Three things that make your rv or boat a tax break
Have you ever considered making your boat or RV a tax deduction?
Owning an RV or boat can be more than just a lifestyle choice—it can also be a bold financial move if you know how to make it a legitimate tax deduction.
While the IRS has strict guidelines, there are three key ways to qualify your RV or boat as a deductible expense: treating it as a primary or secondary home, using it for business purposes, or renting it out as an investment property.Gabe shares three things an RV or boat needs to qualify as a second home.
1. Your RV or Boat as a Primary or Secondary Home
The IRS allows taxpayers to deduct mortgage interest on a second home, and an RV or boat can qualify if it meets the basic home requirements. To be eligible, your RV or boat must have the following:
Sleeping space
Cooking facilities
A toilet
If your vessel or vehicle includes these amenities, you can typically deduct the interest on a loan used to purchase it, just as you would with a traditional home mortgage. Keep in mind that this deduction applies to taxpayers who itemize deductions rather than taking the standard deduction.
2. Business Use of an RV or Boat
If you use your RV or boat for business, you may be able to write off related expenses. Common business uses include:
A mobile office for consulting, sales, or remote work
Entertaining clients for business purposes
Business travel and lodging
To qualify, you must use the RV or boat regularly and exclusively for business. That means you can’t just take occasional work calls from your RV or host the occasional business meeting on your boat—you need to demonstrate that it is an integral part of your operations. Keeping detailed logs and separating personal and business expenses is crucial to staying compliant with IRS rules.
3. Renting Out Your RV or Boat
Another way to turn your RV or boat into a tax deduction is by renting it out. This can provide additional income while allowing you to write off various expenses, including:
Depreciation
Maintenance and repairs
Insurance and property taxes
Loan interest
However, tax rules vary based on how many days per year you use it personally versus how many days it’s rented out. If you rent it out for fewer than 15 days per year, you don’t have to report the rental income, but you also can’t deduct expenses. If you rent it for more than 15 days, you must report the income but can deduct qualifying rental-related expenses.
At the end of the day…
Before attempting to deduct expenses related to your RV or boat, consult with a tax professional to ensure you’re following IRS guidelines. Keeping meticulous records and understanding the rules can help you maximize tax benefits while avoiding potential audits. Whether your RV or boat serves as a home, business tool, or rental asset, strategic planning can help you make the most of your investment.
If you would like to talk through options and see how using your RV or boat can support your tax planning and outcomes, let’s talk. We will find a way to help you keep more of your cash at tax time.
