Many people invest in a large RV for more than just seeking adventure. Some people choose to finance their RV much like they would their home.
Do large RVs count as a second home? Yes, large RVs can be listed as a second home, but you will have to consider what your RV has to offer. A home is only a home in the eyes of the law as long as it follows a certain list of guidelines. So, before you finance your RV as a second home, make sure that your motorhome qualifies.
Here is everything you need to know about listing your RV as a second home.
What Qualifies Your RV as a Second Home?
In order for your RV to qualify as a second home for tax and financing purposes, it first has to pass a series of tests.
This is not only helpful for those who already own an RV but also those who are looking to extend their portfolio.
Here are some of the key features that your RV needs to hit in order to be considered for a second home:
1) Sleeping Arrangements
The first thing you will need to note about your RV is whether or not it has a sleeping compartment.
In order to qualify as a second home, your RV will need to have one. While you may be using the common areas, like couches and benches, for sleeping, they alone do not qualify your RV.
Your RV will need to have a separate sleeping compartment. Either a small room with a bed or even a loft sleeping compartment will both qualify for your RV as a second home.
2) Working Bathroom
The next box you will have to check off in order to qualify your RV as a second home is a working bathroom. This does not mean that you need to have a top of the line traveling restroom located in your RV; just the basics will do.
Your RVs bathroom will have to feature a working toilet and sink as well as a station to shower in. A shower can be anything from an enclosed shower to a detachable shower head that can be used for a quick rinse.
3) Functioning Kitchen
The last thing you will need to have on your RV as far as accommodations go is a fully functioning kitchen. Your RVs kitchen will need to have a stove or a cooktop, refrigerator as well as electrical hook-ups.
This way the owners can easily set up other cooking devices in the kitchen safely.
While this may seem like a big undertaking, have no worries! Most large RVs already come standard with a gallery style kitchen that more than fits the needs for listing it as a second home.
4) IRS Standards to Consider
Besides making sure that your RV is equipt with the right amount of space, you will also need to meet certain IRS standards.
Before you receive interest tax breaks on your RV you have to make sure your loan doesn’t exceed 1.1 million dollars.
While most people aren’t rolling around in million dollars RVs, these standards do not only extend to your RV. All of your listed properties in total cannot add up to more than 1.1 million dollars in loans. This will include properties you have to listen as your main residence as well as real estate investments.
5) The Right Type of Vehicle
You need to be sure that your large RV qualifies as a second home depending on the type of vehicle it is.
This means that it needs to be able to move on its own.
RVs that need to be hitched or on a trailer do not qualify the RV as a second home. This means that if you have a smaller RV that still has all of the arrangments needed but still needs to be on a trailer, cannot be listed.
Why Should You List Your RV as a Second Home?
There are many reasons why people choose to list their RV as a second home. Whether it be for financial reasons or as a matter of convenience; it is something to consider.
So, before you make up your mind, consider these reasons why you should list your RV as a second home:
1) Tax Benefits
The main benefits to listing your RV as a second home comes in the form of a tax break. Homeowners generally receive tax breaks from paying their mortgage. Some people believe that they can collect tax breaks from only their main home. However, this is not the case.
Owners can claim not only their main home but all of their properties as well.
This includes vacation homes, business properties as well as real estate investments. Luckily for you, these tax breaks also include RVs that qualify as second homes.
2) Combining Mortgages
One benefit of owning multiple properties that are listed as homes is that you may be able to get some relief when it comes to mortgages.
Many people prefer to finance their properties together into one lump payment. This not only can help to reduce monthly mortgage payments but will also help you to pay off extended properties sooner as well.
3) Home Owners Insurance
One thing that may not change when listing your RV as a second home is the way you ensure your RV. RV insurance can be quite pricey so its great to be able to cut that cost.
No matter if you are seeking to list your RV as property or not, you will still need to properly insure the vehicle. Here you can read more about what your RV insurance should include.
Since your RV will be listed as a second home, you may need to obtain more homeowners insurance on your RV. However, many insurance companies are willing to combine insurance plans to cover your RV.
This means that by listing both your residence and your RV as a home, you may receive special insurance discounts for covering multiple properties.
How Do You List Your RV as a Second Home?
If you have decided that listing your RV as a second home is right for you, there are some steps you will need to take before raking in the benefits.
Here is a step-by-step guide to getting your second home on the road and rolling:
1) Pass Inspection
The first step to take in order to list your RV as a second home is to pass the points of inspection.
This means that your RV will have to feature a sleeping, kitchen and bathroom area as discussed before. If you find that your RV passes all three of these points, you can move onto the next step of listing.
2) Ensure That Your Finances are in Order
Once you know that your RV is properly fitted with all the arrangments it needs to qualify, you need to make sure your finances are in order.
The first thing you will need to do is make sure that the lump sum of property loans doesn’t exceed 1.1 million dollars.
It isn’t only this that makes you in the clear either. You have to also make sure that your loan payments have reached a certain amount. You have to be able to prove that you have made consistent tax payments on your RV and that they are stated on your previous year’s taxes.
This way the IRS can see that there is a pattern of payments made.
3) List Your RV as a Second Home
If you find that you have jumped through all of the hoops, congratulations, you can officially list your RV as a second home.
The first thing you will need to do now is obtaining a real estate or tax lawyer. This way they can get all of your paperwork in order for you to properly file.
While some people prefer to make this leap by themselves, there is s level of certainty that comes with seeking legal advice. The last thing you want to do is make a mistake when it comes to filing with the IRS or the state.
Legal help will be there for you to make sure that everything is done correctly and order. This way you can be sure you do it right the first time.
Claiming the Benefits of Your Second Home
While the tax benefits of listing your RV as a second home are more than desirable, that isn’t the only reason people do this.
It gives RV owners the peace of mind to know that their treasured motorhome will not only be the perfect vessel for adventure, but also a source of income.
While the money you may receive from tax breaks will not be enough to live off of, it works wonders toward helping to pay for those family adventures.
This will help you to spend less time saving for your dream road trip and more time planning out all of the sights you and your family will see along the way. Good luck.
Sources: winnebagolife.com, thefuntimesguide.com
Maria is the founder of GoDownsize. While studying architecture in Denmark she became fascinated with designing living spaces for boats, tiny houses, RVs, and other small spaces.
She mainly writes about space optimization, interior design, and downsizing. She’s also in charge of our YouTube channel. Read more about Maria here.