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12-01-2012, 05:12 AM
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#1
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Established Member
Join Date: Feb 2012
Location: Brentwood
Posts: 43
M.O.C. #12232
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IRS regarding Full timers and interest?
We sold the house, liquidated almost everything, and went full time in our 2006 Montana (2) Months ago. Does our RV qualify as our main home for interest tax deduction according to the IRS?
IRS Publication 936 -
Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.
Main home. You can have only one main home at any one time. This is the home where you ordinarily live most of the time.
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12-01-2012, 05:37 AM
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#2
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Montana Master
Join Date: Jan 2006
Location: South
Posts: 2,499
M.O.C. #5140
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Yes. It can also qualify as a second home.
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12-01-2012, 11:15 AM
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#3
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Montana Master
Join Date: Jul 2010
Location: Lake Havasu City AZ.
Posts: 1,811
M.O.C. #10552
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Ok now this is something I do know about as I am an EA IRS Enrolled Agent) and own a tax business. Main home is your principle residence. That is the only one that qualifies for the tax exclusion (single $250.00 and MFJ $500.000) to qualify you must live in it any 2 years out of the last 5 years. You can deduct the interest on both the main and a second home to certain limits. Them being interest on loans to one million covering both homes. You are correct on the use qualifiers but only on interest on $100,000 for a 2nd this is also counted as a part of the one million limits. In most cases this may not apply as an RV by its self dose not increase in value. That being said if the RV is on owned land and are sold as a package and the 2 years limit is met then yes the main home exclusion would apply. As to the deductibility of interest paid you can deduct the interest as long as it is the main home or the second home. Again to the million dollar limit. I hope this helps but I fear it is as clear as mud??
__________________
Wayne and Ann Moore
2015 Ford F-350 King Ranch
Firestone air bags, bed saver.
Add 40 GAL tank in bed.
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12-01-2012, 02:15 PM
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#4
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Site Team
Join Date: Jun 2011
Location: Wilsey
Posts: 18,799
M.O.C. #11455
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X2. Complicated, but there it is.
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Dick, Joyce, Diego, Picatso and Gustav
2017 3720 RL, and 2013 HC 343RL
Pullrite Hitch, IS, Disk Brakes, 3rd AC, Winegard Traveler, Bathroom door mod, Dometic 320, couch for desk swap, replaced chairs, sun screens, added awnings, etc.
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12-31-2012, 09:24 AM
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#5
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Montana Master
Join Date: Nov 2002
Location: Oceanside
Posts: 20,028
M.O.C. #20
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Quote:
quote:Originally posted by waynemoore
Ok now this is something I do know about as I am an EA IRS Enrolled Agent) and own a tax business. Main home is your principle residence. That is the only one that qualifies for the tax exclusion (single $250.00 and MFJ $500.000) to qualify you must live in it any 2 years out of the last 5 years. You can deduct the interest on both the main and a second home to certain limits. Them being interest on loans to one million covering both homes. You are correct on the use qualifiers but only on interest on $100,000 for a 2nd this is also counted as a part of the one million limits. In most cases this may not apply as an RV by its self dose not increase in value. That being said if the RV is on owned land and are sold as a package and the 2 years limit is met then yes the main home exclusion would apply. As to the deductibility of interest paid you can deduct the interest as long as it is the main home or the second home. Again to the million dollar limit. I hope this helps but I fear it is as clear as mud??
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Good info, thanks. One point of clarification, if I may. If one has sold everything and is in the FIRST year of fulltiming, they don't meet the 2 of 5 years rule. But still would be able to take the deduction, right? Thanks.
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12-31-2012, 09:42 AM
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#6
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Montana Master
Join Date: Aug 2009
Location: Grand Rapids
Posts: 1,896
M.O.C. #9561
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you can use the interest on your trailer loan but it would seem like you'd have to have of other items to beable to itemize. standard deduction for a married couple is $11,900 for 2012.
good luck
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12-31-2012, 01:16 PM
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#7
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Montana Master
Join Date: Feb 2012
Location: Beaufort
Posts: 545
M.O.C. #12221
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Quote:
quote:Originally posted by sreigle
Quote:
quote:Originally posted by waynemoore
Ok now this is something I do know about as I am an EA IRS Enrolled Agent) and own a tax business. Main home is your principle residence. That is the only one that qualifies for the tax exclusion (single $250.00 and MFJ $500.000) to qualify you must live in it any 2 years out of the last 5 years. You can deduct the interest on both the main and a second home to certain limits. Them being interest on loans to one million covering both homes. You are correct on the use qualifiers but only on interest on $100,000 for a 2nd this is also counted as a part of the one million limits. In most cases this may not apply as an RV by its self dose not increase in value. That being said if the RV is on owned land and are sold as a package and the 2 years limit is met then yes the main home exclusion would apply. As to the deductibility of interest paid you can deduct the interest as long as it is the main home or the second home. Again to the million dollar limit. I hope this helps but I fear it is as clear as mud??
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Good info, thanks. One point of clarification, if I may. If one has sold everything and is in the FIRST year of fulltiming, they don't meet the 2 of 5 years rule. But still would be able to take the deduction, right? Thanks.
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Steve, Yes you can take the deduction regardless.
You also don't need to sell everything to claim the RV as the primary home. Likewise the 2 years do not need to be consecutive. Depending upon your lifestyle, your RV could be principal this year and the stick home the second home. then next year they could reverse roles.
As long as you've lived in both as primary homes 2 out of the last 5 they qualify.
You can only exclude the gain once every 2 years however so when you sell the first and then the second is important to consider.
Again - the sale of an RV - unless attached to some land that gained in value - is academic because I don't think we need to worry about gain on the sale of the Montana.
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12-31-2012, 02:09 PM
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#8
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Montana Master
Join Date: Feb 2004
Location: Pahrump
Posts: 2,523
M.O.C. #1081
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I am so glad we have a simple system...
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01-01-2013, 02:18 AM
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#9
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Montana Master
Join Date: Sep 2004
Location: Leona
Posts: 6,382
M.O.C. #2059
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Congratulations on having enough income to be concerned about it.
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