Your Tax Questions Answered
Deductions for Houses with Wheels
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
By Kevin McCormally, Editorial Director, Kiplinger.com
March 3, 2010
QUESTION: Reviewing the information regarding the $6,500 credit, I seem to fit all the requirements. My problem is my permanent residence purchase will be a fifth-wheel travel trailer. I read where houseboats and mobile homes are acceptable as permanent residence, but I’ve only found one instance regarding travel trailers and it states it must be “affixed to land”. What designates affixed to land? A houseboat is only affixed to land with ropes to a dock or perhaps wire cables to land anchors. Could you possibly clear this up for me?
KEVIN ANSWERS: The IRS doesn’t answer your specific questions, as to whether a fifth-wheel trailer qualifies, but our reading of the statute and the IRS guidance on this point suggests that the IRS would say, “no,” it does not qualify. It is clear that a mobile home affixed to land qualifies and that an r.v. with a motor does not. We believe the IRS would see a fifth-wheel trailer that can be and normally is easily moved from place to place does not qualify. Now, if you were to put it up on blocks to make it immobile, it could qualify as affixed to land.
QUESTION: I am hoping you can tell me where to find information on how/where to deduct the vehicle registration of our travel trailer. It does qualify as a second home, but we paid for it with a credit card so we cannot write off the interest. So, we just need to know where to deduct the registration. We live in California.
KEVIN ANSWERS: If the fee, or part of it, is based on the value of the trailer, that part could qualify as a personal property tax, deductible on line 8 of the Schedule A. See the IRS instructions here.
QUESTION: Can taxes on a loan paid on a travel trailer be deducted as a “second home” deduction?
KEVIN ANSWERS: Yes, a travel trailer can qualify as a second home if it has permanent sleeping, cooking and bathroom facilities. As such interest on a mortgage used to buy the trailer would be deductible, assuming the loan is secured by the trailer. That’s the same rule that applies to a principal residence. You can deduct interest on up to $1 million of mortgage debt secured by a first and second home.
QUESTION: My son bought a modular home it is located in a trailer park park right now but he is going to purchase land as soon as he can afford it is he eligible for the rebate?
KEVIN ANSWERS: A modular home can qualify for the credit. If the cost includes the cost of the lot, that can count, too. You'll find these Q&As from the IRS helpful:
Q. Which home purchases qualify for the first-time homebuyer credit?
A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home.
For homes purchased after April 28, 2008, and before November 7, 2009, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. For homes purchased after November 6, 2009, long-time residents can also get the credit under a special rule for a qualifying replacement home. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you buy your new principal residence.
If you made an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return.
Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
Q. Can a taxpayer who purchases a travel trailer qualify for the credit?
A. A travel trailer that is affixed to land may qualify as a principal residence.
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Reader Comments (3)
Posted by: Jim Chimera at 03/05/2010 11:41:18 AM
If I itemize deductions and choose to deduct sales taxes instead of state income taxes, will I be able to deduct the sales tax paid on a "fifth wheel" trailer in addition to the amount of sales tax from the sales tax tables?
Posted by: kevin mccormally at 03/06/2010 08:38:19 AM
Kevin McCormally of Kiplinger here with an answer for Jim Chimera who wonders if the state sales tax on a fifth wheel trailer can be added to the IRS table amount when figuring state income taxes paid...for those who choose to deduct sales taxes rather than income taxes. Good question. It's clear that you can include the sales tax paid on such a purchase -- assuming the tax rate is the general sales tax rate for your community -- if you tote up all your receipts. It's tougher when it comes to adding the sales tax on the fifth wheel trailer to the table amount. So far, the IRS hasn't specifically said that's okay. It says it's okay to add the sales tax on big ticket items like a motor vehicle, boat, airplane or home...but nonmotorized trailers aren't on the list. Now, if the trailer has cooking and toilet facilities, it could qualify as a second home...and thus qualify.
Posted by: Gary R at 03/07/2010 08:20:18 AM
I work for a big box company with over two thousand stores.I receive from my employer a hourly wage for travel and forty cents per mile from my residence to work .The mileage is paid all miles except thirty five miles per day .The hourly is all travel time minus forty minutes per day.I travel to four different stores one each day of the week on a scheduled recurring basis. Pub463 does not give me a clear answer if I can use this as a deduction.