tax write-off question

[mercc350]

I know campers that are self-contained with a shower and bathroom can be written off on your tax return as a second home. Does anyone know if a popup with the same ammendities can be written off as well?  On federal not on state.

[Tim5055]

I know campers that are self-contained with a shower and bathroom can be written off on your tax return as a second home. Does anyone know if a popup with the same ammendities can be written off as well?  On federal not on state.

This comes up every year, but usually a little earlier in the "tax season".

First of all, I am not a tax professional, I don't even play one on TV.  Take all advice you get over the internet with a grain of salt.  

First of all, your description of what the rule requires is a little different thant the fact.

Now, if we look at
IRS Publication 936 - Home Mortgage Interest Deduction you will find what qualifies.

It states:  "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."

As with many laws and regulations, there is no further definition of "sleeping, cooking, and toilet facilities". This is left up to you as to what you feel comfortable claiming, if audited what the IRS auditor believes and previous tax court rulings on this definition.

I do know that many folks with boats claim the second house deduction for boats with porta pottis.  The other key word is "secured".  Again, from the IRS Publication 936 - Home Mortgage Interest Deduction the definition of secured debt is: "your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt."  So, the pop up MUST be collateral for the loan and it must be at risk if you don't pay the loan.

Again, talk to your tax professional about this issue - don't just take my word for it!

[brainpause]

Yeah...this is one of those times when I feel penalized for paying cash for our new camper. True, I am not paying interest, and that in itself is a reward. However, I saved for a long time, and don't get a break from the government.

Agreeing with Tim's advice, and I have heard of several people being able to use their boat/popup/TT as a deduction.

Larry

[AustinBoston]

One method that always works (strictly for the tax deduction - it may or may not make financial sense in your case) is to use a home equity loan to buy the pop-up.  The equity loan is secured by your first home, and whether the pop-up qualifies is irrelevant.



Austin

[Tim5055]

Yeah...this is one of those times when I feel penalized for paying cash for our new camper.

Dont feel penalized.  Think about it....

I'll use round numbers -

Lets say you are in the 33% bracket (I know you and Holly are up there :yikes: )

Also, lets say you would be paying $500 interest a year


So, have a loan and you pay $500 to the loan company and get a $165 deduction

No loan, you pay $165 more in taxes, leaving you with $335 you didn't pay to the loan company.  Now, I know there is a cost of money (i.e. you could have invested the cash if you ahd a loan and made money) but i still think you save in the long run if you own outright and pay uncle his taxes.

[AustinBoston]

Dont feel penalized.  Think about it....

I'll use round numbers -

Lets say you are in the 33% bracket (I know you and Holly are up there :yikes: )

Also, lets say you would be paying $500 interest a year


So, have a loan and you pay $500 to the loan company and get a $165 deduction

No loan, you pay $165 more in taxes, leaving you with $335 you didn't pay to the loan company.  Now, I know there is a cost of money (i.e. you could have invested the cash if you ahd a loan and made money) but i still think you save in the long run if you own outright and pay uncle his taxes.

This brings to mind something my father used to say: "People complain when they end up in a higher tax bracket.  I would much rather be in a higher tax bracket."

It was at a time when there were a lot more tax brackets.  But the fact was that the only way to get in a higher tax bracket was to make more money.  :p

Austin

[Old Goat]

Me complain about paying taxes on a popup??. Never happen...I am eternally grateful that I was born in America  where I can go camping when and where I want and where camping is a pleasant experience for my family and friends and not a neccessity of life in order to survive....Camping in Somalia, Danfur, Ethiopia, anyone ?? No taxes on popups over there......