Ease Into a Motorhome

Q: I am thinking about buying a motorhome. The RV dealer told me that I can deduct some of the cost of the RV as a second home. Is this true? If so, how much can I deduct? I would like to know before I buy such an expensive item.

— Suzan, Sacramento, CA

A: There aren't many costs of a motorhome that you can deduct on your income taxes. You cannot deduct the purchase price, the gasoline or diesel, tires, maintenance or the park rents. The only costs you can deduct are your property taxes and the interest charges, if you choose to finance.

A used motorhome can set you back a few thousand dollars, while a fancy new one can run into seven figures. Unlike a house, a motorhome will not appreciate over the years. Just the opposite will occur. In time, the value will become virtually nothing. If you have plenty of cash and can afford it, fine. Just don't let a costly RV destroy your finances.

Before you rush out and buy a new RV, I suggest you rent one for a couple weeks. Some people love the lifestyle of traveling in a motorhome, while others don't care for the experience at all. You won't know if you'll enjoy the experience until you've tried it.

Considering the financial impact of buying a motorhome, buy a used one for your first purchase. You can find excellent deals on models that are just two or three years old. If you find you use it all the time, you can always trade it in for a new one.

From my experience in working with retirees, odds are you won't use a motorhome very much. For every person I've met who loves the RV lifestyle, I know of two or three that barely use theirs at all. Many of them just sit in storage collecting dust.

(Scott Hanson, CFP, is a senior adviser with Hanson McClain, an investment advisory company and registered principal with Securities America, member NASD/SIPC.)