Originally Posted by cwc510117
I write off my interest too. I buy new ones every year or two. The way I see it is I "get the interest back"
You actually only get "your tax bracket" interest back only in the amount that your itemized deduction exceeds your standard deduction.
For example, the standard deduction for married filing jointly is $12,600.
That means you need to have at least that amount of property taxes, mortgage interest, medical expenses, charitable contributions, etc before you can deduct a cent.
Even then, you only get the discount of your tax bracket's tax rate. If your taxable income is more than $ 37,450 and less than 90,750, your tax rate is 25%.
So assuming you are in that tax bracket, and all your deductions with the RV's interest included is less than 12,600 dollars, every dollar in interest is out of your pocket.
Say you pay lots of mortgage interest, and with the RV's interest of $2000 included, and your deductions will exceed $12,600 dollars by the $2,000 contributed by your RV loan, your tax "savings" will be only $500 of that interest. $ 1,500 of it will still be "out of pocket".
Worse yet, as your loans age, the tax deduction reduces every year till it disappears even though you are still paying the same amount due to more principle being paid and less interest.
The sales tax deduction has to also pass a "test". You can only deduct the higher
of your state income tax OR your sales tax based on your gross income plus the sales tax on "large ticket" items like a house, car, boat, or RV; not both.
Financing ONLY because "you can write off the interest" is not good money management. If you have to anyway, you "MAY"
get a small financial benefit depending on your particular financial circumstances and where you live.
Additionally, you can only write off the interest from financing the TRAILER in a 5th wheel or Travel Trailer. The truck's interest is NOT deductible. ALL of the motorhome is because it is all one item.