The passage of comprehensive tax reform and the lowering of the corporate tax rate will benefit the RV industry and allow the historic boom times to continue. An unintended glitch in the bill, however, effectively removed travel trailers from the definition of “motor vehicle” for the purposes of floor plan financing interest deductibility. The final version of the bill allows all floor plan financing interest charges on motorhomes to remain a deductible expense. Because of the glitch in how motor vehicles are defined, floor plan interest on travel trailers/towable units will be subject to a 30 percent limitation on interest expenses based on earnings before interest and taxes.
The RV Industry Association applauds the enactment of comprehensive tax reform which will allow the RV industry to continue to grow but supports a technical fix to allow floor plan financing interest charges on towable RVs to be a deductible expense.
Punitive and Luxury Taxes
In an effort to raise funds, state legislators have sought to implement substantial “luxury” taxes on certain automobiles and motorhomes. This could be in the form of an increased sales or use tax or registration fees. These taxes and fees unfairly target RV consumers and lead to an unbalanced RV marketplace in one state or surrounding states.
Similarly, state legislators have attempted to implement or substantially increase recreation or parks use tax only on RV owners, regardless of the fact that there are diverse and numerous other users of the facilities.
The RV Industry Association opposes any proposed taxes or fees that unfairly single out the RV industry or RV consumers.
Second Home Mortgage Interest Deduction
Under the U.S. tax code, RV buyers can deduct the interest on certain loans used to purchase RVs as a mortgage on a second home. RVs qualify for a second home mortgage interest deduction because they are a popular weekend and vacation ‘home’ for middle-class Americans. RV dealers all over America report that the second home mortgage interest deduction serves as a powerful incentive for middle-class consumers to purchase RVs.
During the recent tax reform debate, a compromise was reached that prevented the elimination of the second home mortgage interest deduction; however, it also decreased the mortgage deduction limit from $1 million to $750 thousand. If the tax reform bill had not retained the mortgage interest deduction, there would have been serious damage to our overall economy in the form of stalled U.S. manufacturing, weakened U.S. employment and fewer RV purchases by consumers.
The RV Industry Association supports retaining the second home mortgage interest deduction for RVs.