Today’s lower interest rates are boosting recreation vehicle (RV) sales
by making purchasing even more attractive. Experts say that’s a real
bonus to consumers, along with the tax advantages of RV ownership.
Financial institutions across the country are also offering flexible
payment plans to meet buyers’ needs. This has made it easier to purchase
an RV, because loan terms are being extended making monthly payments
more affordable, according to a Recreation Vehicle Industry Association
(RVIA) survey of RV lenders.
Loan terms for both new and used large RVs now extend up to 15-18
years. Whether the purchase is financed through a bank, savings and
loan, finance company, credit union or RV dealership, the average
minimum down payment for motorhomes is 15 percent. For budget-conscious
families, these attractive terms make RV ownership more economical.
Lenders also consider RVers to be reliable buyers. The reason: Less
than 1.35 percent of all RV loans are delinquent, according to RVIA
figures.
With interest rates more affordable today, financing an RV purchase
can be smarter than tapping into savings or cashing in assets to pay
cash, experts advise. This option offers more economic flexibility,
allowing consumers to further invest their money and obtain returns
greater than the cost of financing. Because RV loans are generally
offered for longer periods, yielding lower monthly payments, financing
might allow the purchase of a larger RV than otherwise anticipated.
For the vast majority of RV buyers, the interest on their loan is
deductible as second-home mortgage interest. To qualify, interest
expense deductions on the RV must exceed the taxpayer’s standard
deduction. In addition, the RV must —
- Be used as security for the loan.
- Be rented out less than 15 days per year.
- Have basic sleeping, toilet and cooking facilities.
Mostly all RV types qualify under these conditions.
The Internal Revenue Service (IRS) publishes two booklets on the
tax deductibility of RV-loan interest: “Publication 936—Home Interest
Deduction” and “Publication 523—Selling Your Home.” Both are available
from the IRS: (800) 829-3676.
