How to Finance an RV as a Primary Residence

Owning an RV can be a really fun experience for those who enjoy camping, hunting, and other outdoor activities. There are several different ways that you can go about obtaining an RV for whatever use you have in mind however depending on exactly how you plan to use your RV, there may be ways in which you can cut down on the total cost associated with purchasing one.

Most people who purchase an RV do so for road trips or other recreational activities. This is similar to buying any other type of luxury accessory like a boat or motorcycle which all come with strict rules and regulations pertaining to how, when, and where you can use any of these toys. If you’re someone who is interested in purchasing an RV but not for any recreational purposes, there are ways that you can receive specialized discounts and preferred loans if you’re considering making an RV your primary residence of living.

If you’ve been wondering about how you can start the process of claiming an RV as your primary residence but haven’t really found the answers you need, you may be surprised to find out that there is a lot of information out there that can help you get started with the entire process. When it comes to making an RV your primary home of residence, there are a lot of legal loopholes and regulations that you’ll need to be aware of before being able to make it official. The size, capabilities, and location of your RV will play a huge role in how your RV can and will be classified in terms of being a primary residence for you and your family. The IRS (internal revenue service) allows you to classify several different assets as your primary home including boats, cooperatives, house trailers, houses, condominiums, and RVs.

This gives you the ability to classify a wide range of different vehicle types and property builds as your place of residence. In order to be classified as a legal place of residence by the IRS, your location must have the following accommodations: functioning toilets, kitchen area or proper cooking infrastructure, and sleeping headquarters. As you can see, there are a lot of different locations, property types, vehicles, and more which meet the qualifications of primary residency set out by the IRS which is great news for those interested in making an RV their primary residence.

In this guide, we’re going to go over all of the most important factors that you must consider before deciding on whether or not you want to make an RV your primary home of residence. We’ll cover every aspect of making an RV your primary residence from the legal aspects involved to how you can go the extra mile in order to create the perfect atmosphere for your RV as a primary residence for you and your family.

To begin, we’re going to assist you in learning more about the entire process involved with declaring an RV as your primary residence and all of the legal fences you’ll have to jump over in order to make it official.

The Process OF Declaring Your Primary Residence

The process of declaring any place as your primary residence is largely the same given the fact that it’s regulated by the IRS. As instated by the IRS, every legal tax paying citizen may only claim one place as their primary residence at any given time. The place that you designate as your home must be a location that you live in regularly throughout the year. The great thing about it is that any vehicle or property can be considered as your primary residence as long as it contains the three qualifying factors which are sleeping headquarters, a kitchen, and a working toilet. Some more great news is that if you decide to use a boat or some other kind of vehicle as your primary residence, it doesn’t have to have a permanent location and you can still claim it on your taxes.

One of the primary reasons that many people decide to claim an RV or boat as their primary residence is because of the homeowner tax deductions which allow you to save money on your yearly tax expenses quite substantially when compared to the amount of taxes that you would pay on a stationary property. In order to qualify for the homeowner tax exemption by using your RV or boat as your primary residence, you must use the RV or boat that you purchased as security for the loan that you used to buy it. By doing this, you’re able to deduct mortgage interest that you would otherwise pay on the loan saving you money all the way around.

If you plan to run a business or home office out of your RV or boat, you won’t be eligible to receive the tax deductions from using it as a primary residence which is something to keep in mind. One of the main things that anybody interested in making an RV their primary residence will have to deal with during the process is being approved for the loan necessary to obtain the RV in the first place.

As of 2019, there are some new rules regarding what can be legally classified as a dwelling or primary residence so read the following section below to learn more.

2019 Dwelling Classifications

  • A dwelling need not be a consumer’s primary residence to fit the definition, thus a vacation or secondary home can be classified as a dwelling. However, for the purposes of the definition of a residential mortgage transaction and the right to rescind, a dwelling must be the primary physical residence of the consumer.
  • Use as a residence include the following items which may be classified as a dwelling such as trailers, boats, mobile homes, cooperative units, condominiums, recreational vehicles, campers, and others used as residences and not dwellings.

As you can see from the above, an RV can more than make a suitable place for living long-term and the law has no problem recognizing your right as a civilian to do so. Now that we’ve covered all of that important information, it’s time to look at how making an RV your primary residence can have other financial implications.

The Financial Implications of Classifying Your RV as a primary Residence

Deciding to classify your RV as a primary residence comes with many other financial implications and side effects that simply getting the IRS recognition required. When you purchase an RV, you’re taking out a loan on a motor vehicle essentially since that’s what the item was manufactured for and serves as up until the point that you decide to make it your primary residence. Motor vehicle loan rates and mortgage rates are significantly different which is why they are categorized and separated each time a person buys one or the other using a loan from a bank or any other lending institution.

Obviously, most motor vehicles cost less than buying real estate or property which is why when you decide to make your RV a primary residence the lending agreement must be converted into one using rules allocated to mortgage lending. Don’t expect to live in your RV as your primary residence while still paying interest on the loan you initially took out for the vehicle under its motor vehicle classification. This can lead to stiff tax consequences and even legal action if it can be proven that you did so in an attempt to avoid paying the appropriate taxes.

You will be required to submit periodic mortgage statements on any and all loans that are closed-end and secured by a dwelling. Once you convert your RV into a primary residence legally, you’ll be subject to paying the high-priced mortgage escrow fees that are often times associated with first position liens on principal dwellings. Federal regulations only allow a consumer to claim one property as their principal dwelling so make sure that your RV is a space that you want to call home for a long time before deciding to declare it as your primary residence.

Once you factor in the thought that you’ll still be paying home mortgage escrow rates when you decide to make your RV a primary residence, you’ll soon realize that making an RV your primary residence is not necessarily cheaper than financing a full-on home or another type of property. To make something very clear, RVs typically do cost much less over an extended amount of time than traditional mortgage loans however once you factor in the cost of actually maintaining the RV and all of the other expenses, you’re responsible for, the two cost differences can become very close within an instant.

In the next section, we’re going to cover all of those various expenses in more detail so that you can get a better understanding of all the responsibilities that come with making an RV your primary residence.

Factors to Consider Before Making an RV your Primary Residence

While making an RV your primary residence can be a very fun and exciting experience, there are several factors that you must consider before making your final decision. By taking these various factors into consideration before applying for a permanent residence in an RV you’ll be able to avoid wasting money or making in the moment decisions that you’re unsatisfied with later on down the line. We’re going to go through some of the numerous variables that you’ll want to consider before finalizing your RV as your primary residence. Make sure that you pay attention to all of the information listed below to make sure that you’re choosing the right path for your RV and permanent place of residence.

Loan Payment

Whether you decide to leave your RV finance loan dependent upon terms set based on current automobile escrow rates or convert it to a primary residence, the fact still remains that you’ll be responsible for all taxes on the “property.” One of the great things about converting your RV loan into that of one which is calculated using primary residency stipulations is that you’ll be able to enjoy the same tax deductions that homeowners do when leasing a mortgage on a physical piece of real estate or land. The amount you’re required to pay on your loan each month will vary depending on the size of your RV, your current credit rating, the length of your contract. And so much more.

Insurance

Another really important thing to consider when purchasing an RV especially one that is intended to become a primary residence is insurance. Your total insurance cost will vary depending on a couple of factors including the location that you choose to park your RV in. RV parks charge a fee and if you plan on parking your RV in one as a primary location of residence, you’ll have to pay a nice insurance price in order to do so legally. Some other factors that will play a role in determining the amount of money that you pay for RV insurance include things like the size of your RV, how much experience you have driving RVs in the past, your existing driving record and a lot more. You’ll want to consider the amount of money that you’re comfortable with spending on insurance prior to making a final decision on whether or not making your RV your primary residence is really something that you want to do.

Maintenance

RVs are not fool-proof so over time you may encounter some situations in which you’ll need to repair some sort of component of infrastructure component in your vehicle. Depending on what’s wrong with your RV, maintenance and repair costs can be very similar if not more in some instances than standard home maintenance and repair costs, because of this you should always have some money saved up in case of an emergency so that you can guarantee that you’ll still be able to use your RV in a safe manner regardless as to what may be wrong with it currently. Once you factor in maintenance to the equation, you’ll soon realize that you’ll likely be paying the same for an RV as you would a small studio apartment or some other sort of leasing property.

Gas Cost

Since RVs are motor vehicles that run off of gas, you’ll need to consider the overall costs of gas that you’ll be paying for your RV especially if you plan on making it your primary residence. Depending on the size of your gas tank, fuel type, and capacity there really is no way to avoid paying the price that comes with filling your RVs tank up with reliable gas while out on the road. If you’re interested in making your RV your primary place of residence but don’t want to deal with the costly gas prices that come with maintaining it over time, you should consider finding a location where you can park your RV on a permanent basis to avoid consistent travel and moving which will lead to increases in the amount of money that you pay for your RVs gas also.

Connectivity Limitations

We live in a world where virtually everyone has a cell phone or some other kind of Internet-connected device. When you live in an RV, you don’t get access to those same luxuries which is something that you’ll want to consider before deciding that you want to make your RV your primary residence. For those independent business owners, for example, you may not have access or the ability to get a reliable and stable Wi-Fi connection installed. If you plan on locating your RV in a rather remote or secluded location, you’ll also have to factor in the possibility that you may not even be able to get a stable cell phone reception out in certain parts of the woods which is something else to keep in mind when deciding on whether or not making your RV your primary residence is the right choice for you. While there will be instances where you may be able to get reception of wi-fi signal for short periods of time, having a solitary connection is something that may be a bit difficult.

Receiving Mail

When it comes to making an RV your primary residence, you’ll need to consider what address you can use in order to receive your mail. It’s unreasonable to think that you’ll be able to constantly change your address to the location of each RV park that you come across or visit so you’ll need to cancel any and all physical mail in order to sign up for online bill pay and statement handling. While you may think that since you don’t have a permanent address that you’re no longer responsible for any of your past debts and obligations, that couldn’t be further from the trust and eventually any old bills or debts that you have will still be linked to your personally identifiable information thus making you responsible to pay what you owe on them.

Waste Management & Sewer Function

While living in an RV is a unique way to carry out your daily functions, that does not exempt you from still being faced with the same challenges as the rest of us normal humans. When living in an RV, you’re totally responsible for all plumbing related issues and handling including finding a way to get rid of the waste itself once it finds its way into your toilet. The best way to deal with sewage while living in your RV as your primary residence is by using a macerator pump or you can utilize various truck stops that have sewage drainage pumps. If you’re uncomfortable with disposing of your own waste, this is something that you’ll want to consider before making your RV your primary residence because it’s something that you can’t find a workaround to.

Misc. Upkeep

While there are a lot of unique benefits to living in your RV as your primary residence, there are also equally as many downsides and other factors to consider that standard homeowners don’t have to deal with. Living in your RV will require more than simply locations and driving across the country, you’ll have to consider factors such as constantly checking your battery water level on a monthly basis, adapting to different weather conditions, storage space, and a lot more. Making your RV your primary residence also means that you’re responsible for providing essential amenities that you otherwise wouldn’t have to worry about when living in a regular standalone home or another property type. You’ll have to consider how you’ll obtain your primary source of electricity, water pumps and pressure gauging, roof-mounted accessories, and a lot more. RV living is definitely not for the lazy and irresponsible because in many instances it comes with more responsibilities than regular property ownership. Before making your RV your primary residence, make sure that you’re ready to handle all of the aspects that come with maintaining a safe and functioning RV over time.

Income

While this factor isn’t directly to RV vehicles themselves, it’s really important that you consider how you’ll be making money while living in your RV. Most people don’t have enough money to pay off their RV loans in full so you need to make sure that you have a reliable income source set-up before deciding to make your RV your primary residence. When living in your RV, you’re exposed to a lot of potentially threatening factors more than living in a stationary home or property location which is why you need to make sure that you’re ready to deal with emergency situations on a consistent basis whether it be addressing physical malfunctions or a financial related issue.

Now that we’ve gone over all of the essential factors that you must consider before making an RV your primary residence, we’re going to cover some of the details that you need to know if you plan on switching states with your primary residence in addition to finding out about the laws surrounding making an RV your primary residences in your home state.

State Laws & Making an RV Your Primary Residence

While making an RV your primary residence may seem like a good idea, there are a lot of state laws and regulations that you must abide by depending upon the state in which you’re attempting to claim primary residency. Each state has its own laws regarding what you can and can’t classify as a primary residence which is why it’s important to know your local laws before deciding on whether or not you want to claim your RV as your primary residence. Every state has different laws regarding what qualifications a property or vehicle has to meet in order to be legally recognized as a primary residence.

Most states classify primary people staying in their locality under to categorization classes which are resident and domiciliary. To understand the difference between these two resident classes, read the section below to better understand which one you classify as.

Domiciliary

A domiciliary is any person claiming to a particular state as their primary permanent legal location of residence. You must also meet the guidelines of that state as defined by the state legislature in order to be recognized as a domiciliary which will vary from state to state. If you’re interested in learning more about obtaining domiciliary status in your state of choice, consider going to a local courthouse or licensing department in order to find out about the specific criteria you must meet to be legally considered a domiciliary in the state that you choose.

Resident

In order to be classified as a resident in your state, you must be living within the boundaries of a state and meet the specific guidelines outlined by that state in order to receive the full benefits of being a resident. You’re also subject any and all tax laws in the state that you decide to become a resident in, this is why you’ll want to review the tax laws in your state before claiming residency. With a residence classification, you also have the ability to either claim or not claim that state as your legal state of residence.

Even though every state has different rules regarding what they will and won’t classify as a primary residence, most of the laws surrounding obtaining legal residency are very similar across state lines. Below, we’re going to list some of the most commonly required qualifications you must meet in any state in order to become legally recognized as a resident of that state.

Common state qualifications to claim residency

  • Registered state vehicles including all recreational vehicles
  • Must be gainfully employed in the state
  • Have a valid driver’s license from the state
  • Permanent residence or addresses within the state
  • The intention of making the state your permanent and legal place of residence
  •  Resided in the state for at least 30 days
  • When not present in the state there is still an intention to return

While these are all of the most common ways to obtain residency, qualifications will still vary from state to state so make sure you check with your local laws and regulators before deciding if you can legally qualify as a resident of your state.

The process of declaring any place as your primary residence is largely the same given the fact that it’s regulated by the IRS. As instated by the IRS, every legal tax paying citizen may only claim one place as their primary residence at any given time. The place that you designate as your home must be a location that you live in regularly throughout the year. The great thing about it is that any vehicle or property can be considered as your primary residence as long as it contains the three qualifying factors which are sleeping headquarters, a kitchen, and a working toilet. Some more great news is that if you decide to use a boat or some other kind of vehicle as your primary residence, it doesn’t have to have a permanent location and you can still claim it on your taxes.

Once you factor in the thought that you’ll still be paying home mortgage escrow rates when you decide to make your RV a primary residence, you’ll soon realize that making an RV your primary residence is not necessarily cheaper than financing a full-on home or another type of property. To make something very clear, RVs typically do cost much less over an extended amount of time than traditional mortgage loans however once you factor in the cost of actually maintaining the RV and all of the other expenses, you’re responsible for, the two cost differences can become very close within an instant.

Financing Your RV As Your Primary Residence

Once you’re at the dealership finalizing the paperwork on your RV, you’ll need to consider whether or not you want to make the distinction between a regular RV purchase and the primary residence classification that you’re going for. Whether you decide to wait after or you go ahead and claim your RV as a primary residence from the beginning, you’ll still be able to receive the tax deduction benefits that regular property owners do. The decision is really up to you however making the classification while creating the contractual loan agreement can also set you up for more potential tax deduction benefits over time.

One of the primary reasons that many people decide to claim an RV or boat as their primary residence is because of the homeowner tax deductions which allow you to save money on your yearly tax expenses quite substantially when compared to the amount of taxes that you would pay on regular stationary property. In order to qualify for the homeowner tax exemption by using your RV or boat as your primary residence, you must use the RV or boat that you purchased as security for the loan that you used to buy it. By doing this, you’re able to deduct mortgage interest that you would otherwise pay on the loan saving you money all the way around.

Obviously, most motor vehicles cost less than buying real estate or property which is why when you decide to make your RV a primary residence the lending agreement must be converted into one using rules allocated to mortgage lending. Don’t expect to live in your RV as your primary residence while still paying interest on the loan you initially took out for the vehicle under its motor vehicle classification. This can lead to stiff tax consequences and even legal action if it can be proven that you did so in an attempt to avoid paying the appropriate taxes.

You will be required to submit periodic mortgage statements on any and all loans that are closed-end and secured by a dwelling. Once you convert your RV into a primary residence legally, you’ll be subject to paying the high-priced mortgage escrow fees that are often times associated with first position liens on principal dwellings. Federal regulations only allow a consumer to claim one property as their principal dwelling so make sure that your RV is a place that you want to call home for a long time before deciding to declare it as your primary residence.

Once you factor in the thought that you’ll still be paying home mortgage escrow rates when you decide to make your RV a primary residence, you’ll soon realize that making an RV your primary residence is not necessarily cheaper than financing a full-on home or another type of property. To make something very clear, RVs typically do cost much less over an extended amount of time than traditional mortgage loans however once you factor in the cost of actually maintaining the RV and all of the other expenses, you’re responsible for, the two cost differences can become very close within an instant.

Conclusion

Use all of the information in this guide to help you find all of the correct regulatory standards, qualification outlines, resident status criteria, loan rate, and other variables that will impact your overall ability to legally claim your RV as your primary residence. You’ll want to make sure that you read up on all of the tax laws in the state you’re interested in claiming primary residency in so that you can avoid any potential legal issues in the future. By going through all of the various steps mentioned in this article, you’ll be able to make your RV a primary residence in no time. As long as you abide by all state and local regulation surrounding what can and can’t be classified as a primary residence, you should have no problem making your RV feel like a stable home for you and your family to enjoy.

Further read:

Best RV Financing Companies Worth Trying

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