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Author Topic: Tax Question  (Read 1868 times)

poconosms1

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Tax Question
« on: September 30, 2014, 06:15:41 AM »
My wife and I have pretty much decided that when the last bird flies from the nest, we're going to sell our home and become full time RVers and travel for 10 years before we're too old.  We are leaning towards a 5th wheel rig.

I have a couple of tax questions I figured I'd float before I talk to an accountant.

1.  Where does one declare their residency if one is constantly traveling?  I'm asking from a income tax question perspective as we wouldn't live in a particular state for more than a few months. 

2. side question - How do you select what state to hold a drivers license?

3.  When you own a home, you deduct the interest associated with the mortgage payment.  If I sell my home and instead of outright purchasing a 5th wheel rig, can I deduct the interest since the RV becomes my home?

Thanks.

SeilerBird

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Re: Tax Question
« Reply #1 on: September 30, 2014, 06:26:05 AM »
Here is an article on full timing I wrote for the library. It might answer some of your questions.
Edit: shortened link.
« Last Edit: September 30, 2014, 07:55:39 AM by Tom »
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Ned

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Re: Tax Question
« Reply #2 on: September 30, 2014, 07:42:24 AM »
The forum library has a section with some useful articles on fulltiming here.  As a fulltimer, you will want to establish a domicile in a state of your choice, and that's addressed in several of the library articles.  There is no one state that's best for everyone, your choice will depend on your particular circumstances.  Yes, the interest on your RV is deductible since it's your home, but consult your tax adviser once you choose a state of domicile.

A nice advantage of full timing is being able to choose your domicile, but it's also a complication.  Do look into the Escapees, an organization that exists to support the full timer, and part timers too, by supplying needed services.
-- Ned -- Fulltimer 1997-2013
1997 Holiday Rambler Endeavor LE
2007 GMC Canyon

Wendy

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Re: Tax Question
« Reply #3 on: September 30, 2014, 10:55:22 AM »
3. Yes, so long as it has eating, sleeping, and bathroom facilities.
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BernieD

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Re: Tax Question
« Reply #4 on: October 01, 2014, 04:57:39 PM »
As long as the RV qualifies as living quarters, as Wendy described, the loan interest on your RV could qualify as a primary or second home for an interest deduction. However, as the standard deduction keeps going up, more and more people are no longer itemizing their deductions. The standard deduction for a married couple in 2013 is $12,200, can be as high as $14,600 if you are both 65 and another $1,200 if the navigator is legally blind. These numbers will be higher for 2014. So unless your deductible expenses exceed those standard amounts, you won't save any taxes by deducting interest. You lose your real estate tax deduction from your stick house and, in another couple of years, the threshold for medical expense deductions climbs to 10% of taxable income for those over 65 also, reducing another chunk. I wouldn't plan on financing the RV strictly for the tax deduction.

As others have pointed out, your state of domicile is somewhat of a personal decision using the Forum resources to evaluate. Once decided, that is usually where you would register your vehicles, get your drivers' licenses and register to vote.

Bernie Dobrin, Enrolled Agent
Bernie & Marlene Dobrin
Home is Goodyear, AZ
Missing our Travel Supreme

Robert Olson

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Re: Tax Question
« Reply #5 on: October 01, 2014, 10:39:21 PM »
I agree with everything Ned said.  We have been full timing 2 yrs now and kept Texas as our residency (for family, voting, taxes).  The only thing I would add is, if it works for your situation, try to pick a state with no income tax.  Good luck, have fun.
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Arch Hoagland

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Re: Tax Question
« Reply #6 on: October 02, 2014, 01:28:36 AM »
Have you set up a Trust so that if you are both killed in an accident your heirs know what to do?

This will have an impact on what state you claim domicile.

I'd suggest you talk to a lawyer and an accountant. All your assets could wind up in court and eventually go to the state.
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