Paying taxes is part and parcel of our everyday life. RV tax deductions is not an exception. Tax deductions varies and you need tax tips on how to do taxes while still managing your digital nomad finances.
So, do you pay sales tax on a used RV? Yes. Most, although not all, states require you to pay sales tax when purchasing a used RV. No tax deductions are applicable in non-tax state.
Besides, the sales tax vary depending with your area of permanent residency resulting in variations in tax deduction list.
Even when engaging in RV life, be sure to abide by the tax laws. Self employed tax deductions are also applicable and no one has an excuse not to pay taxes.
Keep in mind that police can search your RV without a warrant and you need to show the needed documents including abiding by tax laws. Be safe and do not be found on the wrong side of the law.
More insights concerning taxes and RVs has been shared including
1)Paying RV Tax
- How much is tax on a camper?
- How can I avoid paying sales tax on my RV?
2) RV Tax Deductions When Buying RV
- Buying an RV from another State
- What is the best State to buy an RV in?
- 7 tax tips deductions and credits for RV living (video)
3) Registering an RV
- Registering an RV in another State
- How much does it cost to register an RV?
4) RV Loans
- How can I get out of an RV loan?
5) Can you claim an RV as a primary residence?
1)Paying RV Tax
How Much is Tax on a Camper?
Tax applicable on camper varies based on State and even county. Besides, an RV sales tax tends to be significantly lower than those who pay in form of VAT such as the Europeans or the Brits.
The following is a guide of sales tax deduction rates per State using the Tax Information publication issued on December 31, 2019 to be used in 2020. Slight variations can be evident depending on county laws.
|State||Sales tax (Exempt local tax)|
|Alaska, Delaware, District of Columbia, Iowa, Maryland, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, South Dakota||None|
|Connecticut||6.35% sales below $50000 7.75% sales above $50000|
|Georgia, Hawaii, New York, Wyoming||4%|
|Idaho, Kentucky, Michigan, Pennsylvania, Vermont||6%|
|Illinois, Texas, Massachusetts||6.25%|
|Indiana, Rhode Island, Tennessee||7%|
|Mississippi||5% weight below 10000lbs.|
3% weight above 10000lbs
How can I Avoid Paying Sales Tax on my RV?
There are two ways to avoid paying sales tax on a camper trailer when engaging in RV living without breaking any law:
A common RV hack is to consider making a purchase of an RV in a state that charges no sales tax such as
- District of Columbia,
- Lowa, Maryland,
- New Hampshire,
- New Mexico,
- North Carolina,
- North Dakota,
- South Carolina,
- South Dakota States.
Example buy the RV from Montana, whether or not it’s your resident State, and have it registered there then later delivered to you. 0% sales tax would be incurred only the registration processing fees.
Another camper life tip of not paying taxes and still be safe in terms of law abiding is by placing an order for your camper trailer in whichever state you are in but have it delivered in another non-tax state.
Example, buy in California where sales tax is 7.5% but have it delivered to a non-tax State such as Montana and leave it there for 91 days from the first 6 months of you owning the RV. You will pay 0% tax.
However, if no tax exemptions exists in your state then you have to pay. No possible tricks with the law.
2) RV Tax Deductions When Buying RV
Buying an RV from another State
It’s not always the case that you must buy an RV locally, but you can also purchase from other States.
However, when buying from another State you need to exercise caution in order to be safe and derive maximum utility from your asset.
For instance, you could choose to purchase the RV in a non-tax State simply to have extra coins in your pocket as savings. But, remember to inquire about registration process since you may need to part with extra finances.
Besides, once the RV is delivered in your residence State will you have problems to insure the RV? Some local insurers do not want to insure RV bought out of State.
Besides, sometimes buying out of State could deny you the free service warranty when you need since you are quite far from the supplier.
Worse is the supplier may fail to communicate and returning the asset is time consuming, too much paper work involved, and you could end up spending beyond your planned budget.
As a digital nomad be ware that the risk of getting scammed in an out of State purchase is high compared to when purchasing your camper locally.
The statement doesn’t necessarily mean that all out of state suppliers are cons, but you need to be keen and verify the authenticity of your supplier before making any purchase.
Considering to purchase your RV locally where you get to interact with the actual supplier could save you in the long run expenses and time to incur for registration, insurance, and warranty coverage.
Although this will depend with how friendly your State sales tax are being charged. Follow this guide to help you make informed decision on qualities to look for when buying your RV.
What is the Best State to Buy an RV in?
Since different States offer different sales tax, the prices of the RV whether new or used fluctuate from on Sate to another.
However, you can consider purchasing the RV in a non-tax State where the price could be cheaper than in a State that offers a sales tax.
Possible ideal places to purchase an RV is from a Non-tax State including Alaska, Delaware, District of Columbia, Lowa, Maryland, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, South Carolina, and South Dakota States.
The best ideal State to purchase your RV or the best State to register an RV is the State of Montana.
It is because it offers 0% city, county, and general sales tax. Most interesting is that you don’t have to be a resident of Montana.
However, with a small fee the service providers will assist you with the whole registration process. Another State you can consider is South Dakota.
Besides, some non-tax States require proof of your permanent residence to be that State for you not to pay the taxes.
It is worth keeping in mind that at times insurance brokers may give you a difficult time to register the RV in case your RV is not registered in your State of your primary residence.
However, keep in mind that the sales tax to be paid by a buyer are based on the State the RV was registered and not the State in which the RV is to be bought.
Furthermore, the RV registration is to be linked to the registration of your State of your primary residence.
7 Tax Tips Deductions and Credits for RV living (video)
Watch this video to gain better understanding on tax deductions and credits for RV.
3) Registering an RV
Register an RV in another State
It is possible to purchase and even register an RV in another State. You can consider this action as a way to save extra expenses incurred in paying sales tax especially when you buy the RV in a non-tax State.
Remember to inquire more about warranty, and find out how easy you will be able to insure your RV at your local state.
How Much Does it Cost to Register an RV?
All RV campers. RV trailers, or motorhomes need to be registered whether you have bought it as new or in used form. The cost of registering an RV vary depending with your state of residency and the type of an RV.
For example, a pull-behind campers may have a different registration charges in comparison to a motorhome.
RV are registered just like a car in most states. However, states have varying policy concerning RV registration resulting in varying cost of charges and may not be similar.
Often, registration maybe based on the weight, size, and or years after manufacture of the RV. However, some charges may be based on the county you reside.
Example, Delaware State charges $40 to register RV weighing less 5,000 pounds and additional $6.40 for any added 1000 pounds.
Illinois state charges $78 for RV weighing less 8,000 pounds, $90 charge apply for RV weighing 8001 pounds to 10,000 pounds, and a constant charge of $102 for RVs above 10000 pounds.
Indiana State charges $29.35 for registration. Maryland State charges $135 for weight below 3700 pounds and $187 charges above the 3700 pounds.
Massachusetts State do not charge RV below 3000 pounds since you are not required to register it. Missouri State charges $32.50 for registration.
Montana State charges of RV below 2 years you pay $282.50, 2-5 years you pay $224.25, 5-8 years you pay $132.50, above 8 years you pay $97.50.
Other states register RVs just like a car.11 years and above are eligible for permanent registration with a fee of $237.50
4) RV Loans
How can I Get Out of an RV Loan?
Sometimes camping in RV is associated with some challenges that you may wish to escape if possible. One of the possible troubles is failing to service your RV loan as agreed due to several reasons.
It is possible to get your loan cleared. One of the most effective ways to get out of an RV loan is through debt settlement.
In this type of loan settlement, you can find a professional such as an attorney to help you out.
You will declare your financial status to your attorney for review in order for the attorney to derive the most effective settlement plan for you without making you go bankrupt.
Several reasons can make you get stuck with an RV loan not knowing what should be your next step. Furthermore, sometimes other than repaying your loan you could be having other mandatory expenses.
In the end your finances get drained and in turn delays your commitment to paying your loan. Some of the mandatory expenses include
- insurance cover,
- license registration and renewal,
- storage among others,
- miscellaneous expenses
- job loss
- prolonged sickness
Also, you could have purchased the RV in a hurry and maybe through a dealer who you end up agreeing to pay too much loan than what you could have paid if you could search for better market rates of other RV suppliers.
Also, perhaps you took too much loan you are not able to settle. In addition unexpected expenses or sudden loss of employment could make you unable to settle your loan.
I believe the aim of you purchasing an RV is to enjoy every move you make and be a happy camper.
However, having piling unpaid loans could trigger financial regrets and even cause you to lack the enthusiasm to adventure in your second home, your RV.
Loan settlement through an attorney could jumpstart you to a newer beginning. Besides, your debt can be forgiven.
5) Can you Claim an RV as a Primary Residence?
Yes. You can claim your RV as your primary residence if not your second home. People who enjoy adventure and who tend to be always on the move may consider declaring their RV as the primary residence since that’s where one spends most of their full-time living in RV.
However, it is worth noting that for the RV to be declared as a place of your residence ensure the RV has a permanently mounted bathroom, sleeping, and cooking facilities.
Besides, since your RV is your main home or your primary residence it should be listed in a manner that you can easily be located.
For instance, it should have a postal address, tax return address, voter registration address, car registration, and even driver’s license.
These details are essential part of government recording since it can also be used in tax obligations where deductibles need to be made.
In brief, just as the detailed address of your current home are should also be applied in your RV since that is what you desire to make it as your primary residence.