Living at home doesn't necessarily mean you have to be tethered to one place. For federal tax purposes, a boat or a recreational vehicle can be either your main or secondary residence, entitling you to take advantage of the same tax deductions as a homeowner of a typical house.
The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
A home is broadly defined
The Internal Revenue Service (IRS) defines a home broadly, allowing the term to encompass:
- Mobile Homes
- House Trailers
The test the IRS applies is simply that the property must have all three:
- cooking and
- toilet facilities
If so, it can be treated as a primary or secondary residence for tax purposes.
Declaring your main home
The IRS allows taxpayers to designate one residence only as a main home at any one time. The main home must be the one where you ordinarily live most of the year.
This can be a boat or RV even if the boat or vehicle doesn't have a permanent location. As long as it contains the required facilities, you can claim it as your main home on your taxes.
The benefit of treating a boat or RV as your primary residence, is to take allowable homeowner tax deductions that can decrease your overall tax bill. As long as the boat or RV is security for the loan used to buy it, you can deduct mortgage interest paid on that loan.
In the event you decide to move back into a more traditional house, your boat or RV can also be treated as a qualified second home, and the same homeowner deductions apply.
However, if you are subject to the Alternative Minimum Tax, this deduction is not allowed.
Divided use of your home
The only part of your main home that qualifies for homeowner tax deductions is the portion used for residential living. This issue arises, for example, if you use your houseboat to provide business tours, or if you have a dedicated area in your RV that you use as a home office.
To receive full tax benefits, you must divide your home between the part that is your primary residence and the part that is used to generate income. You can then use these portions to allocate the appropriate deductions between personal itemized deductions and business deductions.
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