Is the Interest I Paid on My Travel Trailer Deductible?

Many people choose to take their vacations using a recreational vehicle, such as a motor home or a travel trailer. Owning an RV provides a convenient way to take trips with ease and on your own schedule. Campgrounds and RV parks are available to suit the vacation needs of any family, giving you a place to tow or drive your second home. In many cases, you can claim tax deductions for your RV.

The Travel Trailer as a Second Home

The Internal Revenue Service has clear definitions for what constitutes a home, or a second home. A travel trailer or other recreational vehicle, including a boat, is considered a second home if it has its own sleeping quarters, as well as a kitchen and bathroom or toilet facility. It does not matter if the second home is permanently attached to the ground, or if it is on wheels or on the water.

Interest Deductions

The interest that you pay for a mortgage is tax deductible if your loan meets certain guidelines. You cannot owe more than $1.1 million total on all of your home loans, including RV and boat loans, as well as your primary residential mortgage. To deduct the interest on a travel trailer loan, the loan must be secured by the travel trailer. If you took out a personal loan to purchase a travel trailer, you cannot deduct the mortgage interest.

Reporting RV Interest

The bank or finance company may report the loan interest that you pay on a form 1098, which is the form that is prescribed by the IRS for this purpose. You carry the amount from the form 1098 onto Schedule A, line 10. If the bank does not give you a form 1098 detailing the interest you paid for the year, you can still deduct the interest on Schedule A, itemized deductions, on line 11.

Other Deductions

You may pay other taxes and fees with your travel trailer that may be deductible on your income taxes. Many states and counties charge a seperate tax based on the value of the travel trailer, which may be called an excise tax or value added tax. Since the tax is based on the value of the travel trailer, you may deduct this tax as part of your itemized deductions.