Like the housing and automotive businesses, the recreational vehicle industry has been hit hard by the economic turmoil. Many people who otherwise would have considered an RV this spring or summer instead are worried about losing their homes or jobs.
Dealers aren't stocking their lots with inventory. In 2008, RV shipments were down 32.9 percent from 2007, according to the Recreation Vehicle Industry Association, and shipments are expected to go even lower in 2009.
The dried-up credit market is affecting buyer and seller, too. Credit restrictions are causing RV buyers to delay purchases while forcing RV dealers to keep inventories low.
There is some good news though. Qualified buyers with good credit should be able to find a lender who is eager to give them a loan. Kristin Taylor of Kidd RV Resort Consulting in Tallahassee, Fla., says, "The American Bankers Association released a report saying 'RVers' are deemed very trustworthy when it comes to credit lending and are preferred above all credit seekers."
Stimulus helpThe RV industry and hopeful RV buyers may benefit from provisions included in the recent economic stimulus package. Phil Ingrassia, vice president for communications for the National RV Dealers Association, says the tax provisions involving RVs may help boost sales. The American Recovery and Reinvestment Act includes a tax provision that allows a portion of the sales or excise tax paid on the purchase of a new motor home to be deducted. The deduction is applicable to taxes on the first $49,500 of the purchase price. Individuals with an adjusted gross income of up to $125,000 and joint filers with an adjusted gross income of up to $250,000 are eligible for the deduction.
"We're hopeful that federal credit and stimulus packages will help free up credit and contribute to the RV industry's recovery," says Richard Coon, president of the Recreation Vehicle Industry Association.
Existing tax breaksEven before the stimulus legislation, RV owners had some tax advantages. The interest paid on most RV loans is tax-deductible as home mortgage interest, provided the following qualifications are met:
- The RV must be used as security for the loan.
- The RV must have basic sleeping, cooking and toilet facilities.
- The RV must be rented out less than 15 days per year.
- Interest expense deductions on the RV must exceed the taxpayer's standard deduction.
Taxpayers may not claim the interest from more than two qualified homes on their tax returns. Ask your tax adviser for more information or check out related information on the IRS Web site.
2009 outlook is cautiously optimisticWhen trying to predict how things will go for the industry this year, RV experts have mixed assessments. Shipments are expected to be lower again this year than they were before 2008, but there are signs of a turnaround. "We're optimistic about the industry's long-term future," says Coon. "Primary demand for RVs remains strong. RV show attendance and sales this year have been encouraging. Sales at shows across the country exceeded expectations."