Buying a home as a personal residence, including a travel trailer that meets the Internal Revenue Service's definition of a home, does not by itself qualify you for a tax deduction, but several aspects of owning a home might provide you with some tax breaks that aren't available to other taxpayers. For example, you can deduct mortgage interest expenses, real estate taxes and sales taxes on your first and second homes.
The IRS considers a qualifying home to be one that you use for residential living. It must have facilities for sleeping, cooking and toilet functions. This description might apply to a single family house, condominium, mobile home, boat, house trailer or a similar type of structure. You can claim the appropriate deductions for your travel trailer as long as it meets IRS standards as home and you use it as your first or second home.
In the past, you could write off the interest on your credit cards, auto loans and other personal debts. That time is long gone, and as of the 2012 tax year, the only personal debt that qualifies for an interest deduction is qualified residence interest. The Internal Revenue Service lets you deduct the interest on both your first and second home, provided the total amount of your mortgage debt on those homes does not exceed $1 million and the debt is secured by those properties.
For the 2011 tax year, you had the option deducting either your state and local income taxes or your state and local sales taxes. The sales tax deduction applied to both your regular purchases and extraordinary purchases. If you lived in a state that charged both a state income tax and sales taxes, you would need to figure your deductions using both methods to determine which would provide the largest deduction. The option to deduct state and local sales taxes expired as of the end of 2011, unless Congress votes to extend it.
Real Estate Taxes
You can deduct your state and local real estate taxes, provided the taxes are based on the assessed value of your real estate and are charge uniformly throughout the jurisdiction. Your local tax assessor might not consider your travel trailer to be real estate, but you might have to pay personal property taxes on it. Your personal property taxes are also deductible, provided they are charged annually and are based on the travel trailer's value.
You must itemize your deductions if you want to take any deduction for buying a travel trailer. If the total amount of your itemized deductions is less than your standard deduction, you'll be better off claiming the standard deduction. The IRS recommends figuring your taxes using both methods, choose the method that offers the best results.
- Creatas/Creatas/Getty Images
- Can a Home Equity Line of Credit Be Deducted on Taxes?
- Does Mortgage Interest Help on Taxes?
- Can You Claim a Travel Trailer on Tax Returns?
- Can a Boat Be Considered a Second Home for a Tax Deduction?
- What Items Qualify as Deductions on Your Tax Return?
- When Is Mortgage Interest Not Deductible?
- Tax Breaks on Houses and Rental Homes You Own
- Is Mortgage Interest Included in the Property Basis?