Things to know before living in your RV full time
Claudia Rutherford’s $ 750,000 home has plenty of luxury appointments – a spacious living room with leather sofas, a gourmet kitchen, and three-zone air conditioning.
It also has four wheels and a 600 horsepower diesel engine. That’s because Mrs Rutherford, 67, and her husband, Jack, 73, live in a 45-foot-long American Eagle Heritage Edition coach from American Coach.
The couple sold their 39-acre farm in Perkasie, Pa., In November 2020, moving from a five-bedroom home to pursuing full-time RV life. And they are not alone.
According to an owner demographic profile released in March 2021 by the RV Industry Association, a trade group, there were 11.2 million RV owner households in the United States, up 26% from the 8.9 million 2011. Approximately 400,000 RV owners are considered full-time RV owners today. The median age of an RV owner is 53, 70% are married and 29% have an annual income over $ 100,000, according to RVIA.
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But those who adopt a nomadic lifestyle face multiple legal and financial considerations, the most important of which is choosing a home.
“This can have significant legal ramifications,” said Martin M. Shenkman, lawyer and certified public accountant in Fort Lee, NJ. “Domicile can affect a wide range of legal rights, from income tax to estate planning and matrimonial law.”
Home is defined as where you intend to live permanently and eventually return. A person can have several residences but only one legal domicile.
“A lot of people just count how many days they are in the old jurisdiction and go through checklists on the internet that tell them to change their driver’s license and get a library card, but that’s not enough.” , said Mr. Shenkman. “You must show the intention to change domicile.”
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Some motorhome operators may choose to keep their domicile, so a change of domicile may not be necessary. Mr Shenkman noted that keeping your own home might make it difficult for someone to successfully claim that they have moved to another city or state, as their intention appears to show a permanent connection to their home. old location. Those who prefer to travel without a permanent base of operations, however, still need a legal domicile to register their vehicles, acquire a driver’s license, vote and possibly pay taxes.
Because they have no income taxes, Florida and Texas are popular states for full-time RVers to establish their domicile. But selecting a state based solely on taxes can lead to disastrous results. Texas, for example, is a communal property state in which all marital property is held jointly and divided equally in the event of divorce. Florida, on the other hand, follows the rule of equitable distribution, which can lead to a very different distribution of assets. State laws also affect estate planning and investment planning and vary widely. The right choice of domicile is therefore essential.
Another issue that RV buyers face is payment for the vehicle. “Homes tend to increase in value over time, while the value of RVs declines,” said Todd Minear, a certified financial planner in Liberty, Missouri, who owns a Class C recreational vehicle. 32 feet he uses for his vacation. “Someone who goes out and buys a brand new motorhome can take a 20% hit once they’ve driven it off the lot.” This is why he recommends paying cash for the RV, unless the buyer gets a low interest rate and then invests the money he would have spent in the RV in the hopes of getting a rate of. higher after-tax return. “Funding can be good for that person,” he said. “But if the person is risk averse, it makes more sense to buy directly.”
For those considering financing their purchase, RV loans are readily available, said Michael Lax, executive vice president of Bank of the West, an RV lender. Terms of up to 20 years are available and the principal can range from $ 10,000 to $ 1 million or more. Interest on the loan may be deductible if the RV is a first or second home, has sleeping, cooking, and restroom facilities, and otherwise meets IRS requirements for mortgage interest. qualified.
Here are some things to consider if you are interested in pursuing a full-time RV lifestyle.
Prepare to be challenged
If you are planning to change your legal domicile, you will file a final state resident tax return in your old state. The income tax form for non-residents and residents of part of the year in New York State, for example, has a box for the date you left the state. It is a red flag for state tax authorities to let them know that you are no longer claiming to be a resident, Mr Shenkman said. If you are audited, make sure you have documents to support your change of domicile, much more than a new voter card or a new driver’s license. When Mr. Shenkman, who now lives in New York, previously moved from New Jersey to Connecticut, he took photos of local events and visits with friends in his new state to prove he was there. He also kept a diary on his laptop, noting where he was and what he was doing on a given date. This contemporary brief detailing his whereabouts would help substantiate his claim for a new home if it were ever audited, he said.
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Consult the right experts
Mr. Shenkman suggests that those considering becoming full-time RVers and wanting to move to a new home consult a lawyer, financial advisor and accountant who specializes in state and local taxation. They must ensure that they properly separate their domicile from their old jurisdiction and establish a new domicile in their new place or state. A financial planner may need to adjust your municipal bond portfolio or reassess your cost of living, and a lawyer can determine if the change of domicile affects your marital rights or estate planning.
A lot of people think that they will save money by selling their home and living in an RV full time, but it depends on your lifestyle. “If you go to Florida and stay in a waterfront RV resort, it will be very expensive compared to visiting national parks and primitive camping with a generator or solar panels,” said Mr. Minear said. Ms Rutherford said her expenses averaged $ 5,000 per month, including the cost of finance and gas. She said that while a luxury RV resort can cost $ 105 a night, she no longer has to pay property taxes or home insurance on their old farm. Her husband, who is still legally domiciled in Pennsylvania, is saving money for full-time RVers.