Exploring Tax Rules for Boats and RVs

ARTICLE | January 23, 2025

Authored by Vasquez + Company

Introduction

The landscape for how boats and recreational vehicles (RVs) are treated under federal tax rules can be surprisingly complex. With the passage of the Tax Cuts and Jobs Act (TCJA), certain deductions have changed in ways that may affect boat and RV owners who use their property for personal enjoyment, business activities, or donate it to charitable organizations. The purpose of this article is to clarify the key tax considerations you should keep in mind if you already own a boat or RV—or are thinking about getting one. By better understanding the rules and regulations, you can ensure that you make the most of the available benefits while staying in compliance with IRS guidelines.

Under current tax laws, a boat or RV can serve multiple uses: it may function as a second home (complete with sleeping, cooking, and bathroom facilities); it can be chartered out or rented to third parties for income; or it could be donated to a qualified nonprofit organization. Regardless of how you plan to use your boat or RV, paying attention to the associated tax implications can help you strategically manage costs. Below is a detailed look at several potential tax-saving opportunities.

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Careful planning and solid documentation can help boat and RV owners navigate the often complex tax rules. Chartering arrangements can yield deductions if you can demonstrate a genuine profit motive. Boats and RVs with specific features may qualify as second homes, potentially providing a valuable opportunity to deduct mortgage interest. Donating your vessel or vehicle to charity could offer a meaningful tax deduction if you follow the proper appraisal and documentation requirements. Finally, by reviewing your unique situation under the current SALT cap, you can determine whether deducting sales tax on your purchase makes sense.

Since tax laws are always evolving, working with an experienced tax advisor is the most reliable way to ensure compliance and discover new opportunities for savings. A professional can help classify your ownership and usage properly, maintain the right records, and guide you in maximizing your deductions. By taking a comprehensive, informed approach, you can enjoy your boat or RV while also making the most of its potential tax benefits.

Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.