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George Saenz, the Bankrate.com Tax Talk columnistWriting off loan interest on RV as 1st home

Dear Tax Talk,
I know that you can write off a recreational vehicle as a second home, but what about a first home? I currently don't spend the majority of my time in the RV (I rent a house), but a good amount of time per month is spent in the RV. I have not purchased a home yet, as the market isn't real good for a buyer and I am not sure if I will be staying in Vegas long.
-- Scott

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Dear Scott,
An RV can be considered a first or second home for purposes of the mortgage loan interest deduction. This means that if you have sufficient deductions to itemize in excess of the standard deduction, you can use the RV loan interest as an itemized deduction that will save you some taxes. The standard deduction is an amount allowed to taxpayers based on their filing status as a write-off against their taxable income.

By itemizing deductions such as home mortgage interest, property taxes, state and local income taxes and charitable contributions, among other things, taxpayers can increase their write-offs and reduce their taxable income. Usually, taxpayers who rent their homes or live in a state that does not impose income taxes will not have sufficient deductions to itemize and will just claim the standard deduction.

To meet the IRS standard for deducting loan interest, an RV must be used as security on the loan. It must also have cooking, sleeping and toilet facilities. Publication 936, "Home Interest Deduction," says that if you rent out the RV to someone else, you must use it personally for more than 15 days per year in order for it to be considered your second home and not strictly a rental property.

The same rule also applies to boats and trailers, so you could conceivably deduct an RV as your primary residence and a qualifying boat as a secondary residence. And if you work from an office space in your RV, even that may be a deductible business expense.

To ask a question on Tax Talk, go to the "Ask the Experts" page, and select "taxes" as the topic.

Bankrate.com's corrections policy -- Posted: Sept. 13, 2006
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