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Old 07-21-2015, 10:16 PM   #11
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Zero down is a sucker bet . You will forever owe a lot more than the trailer is worth , no equity !
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Old 07-21-2015, 10:28 PM   #12
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Zero down is a sucker bet . You will forever owe a lot more than the trailer is worth , no equity !
Not if you triple the payment.
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Old 07-23-2015, 05:27 PM   #13
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Main reason we're looking at financing is the tax deduction.


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Old 07-24-2015, 06:18 PM   #14
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Main reason we're looking at financing is the tax deduction.


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Not a great way to look at it. If you get a 40% tax deduction (probably on the high side as most people pay less than 20%) you are still paying the bank $.60 on each dollar you pay in interest.

We financed ours because we were getting much higher returns in brokerage accounts (and still are) that the interest was significantly less than what we are making on the money. Now if that money was sitting in a CD making less than 1% and I was paying 5% interest than I'd definitely had paid cash for the unit.
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Old 07-24-2015, 06:21 PM   #15
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Old 07-24-2015, 06:56 PM   #16
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Not a great way to look at it. If you get a 40% tax deduction (probably on the high side as most people pay less than 20%) you are still paying the bank $.60 on each dollar you pay in interest.

We financed ours because we were getting much higher returns in brokerage accounts (and still are) that the interest was significantly less than what we are making on the money. Now if that money was sitting in a CD making less than 1% and I was paying 5% interest than I'd definitely had paid cash for the unit.
Glad someone brought this up; a whopping 70% of American households do not itemize at all so the mortgage interest deduction is useless to them. They will pay 100% of their mortgage interest.

Of the remaining 30%:

4% are in the Zero Percent tax bracket and write off 100% of their mortgage interest because after topline deductions (Oil Rig write downs, etc), they have very little taxable income left to tax.

8.8% are in the 10% tax rate and can write off 10 cents on the dollar of interest.

39.6% (of the 30%) can write off 15 cents on every dollar in interest.

32,7% (of the 30%) can write off a quarter (25 cents on the dollar of interest).

IF you do itemize, AND you MUST finance your home and/or your RV, a 10 to 25% assist from the government (meaning the rest of the taxpayers). is better than a poke in the eye.

Only the top 5% of Americans REALLY benefit from this deduction (35% of a million dollars in interest for example). For most of us, if we can get a clip of a few hundred bucks; its a big deal.

If you own your own home free and clear, have it more than 25% paid off (after 25% your payment is mostly principle), or rent, financing "to write off interest" is a big mistake, IMO.

Who Itemizes Deductions? | Urban Institute

In fact, it is even worse than that, because you still don't make a dime until your total deductions exceed the standard deduction ($6,300 Single or $12,600 Married filing jointly). Since due to the deduction "floors", most of us only HAVE interest and Real Estate taxes to deduct. So you would only get the benefit of the part of interest that exceeds that "floor" (you would have gotten the rest and the taxes anyway in the standard deduction).

IE (Married Joint Return) You pay $2,000 in Taxes and your Home Interest is $6,000, your RV's interest is $1,000; You can write off NOTHING as you take the standard.

Same situation:

You pay $3,000 in Taxes and your Home Interest is $8,000, your RV's interest is $2,000; You can write off $13,000 MINUS the Standard ($12,600) leaving 400 bucks of deductions "to the good"

If you are in the 20% tax bracket, you "get back" 80 bucks refund BUT you paid 2 GRAND in interest on your RV.
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Old 07-24-2015, 09:12 PM   #17
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My wife has an accounting degree, she is a stickler about deductions. We do itemize and we would benefit from the deduction. So for us, putting $20k in the brokerage, financing the RV, and deducting the interest makes sense for us..... well, it does to my wife...
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Old 07-25-2015, 06:49 AM   #18
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My wife has an accounting degree, she is a stickler about deductions. We do itemize and we would benefit from the deduction. So for us, putting $20k in the brokerage, financing the RV, and deducting the interest makes sense for us..... well, it does to my wife...
As mentioned before, if you are getting returns on the money higher than the finance charges and can guarantee that will be so for the life of the loan, it can make sense to finance.

BUT consider this:

Interest rates will be predictable for the life of the loan (unless you were unfortunate enough to be talked into a variable rate; interest rates can only go UP from here) and must be paid every month regardless of how your money situation is.

Market returns, while the highest that they have been in decades, are NOT predictable and we could be seeing the end of the current bull market. If so, market returns could be negative over the remaining life of your loan.

Even a short market downturn could wipe out any possible advantage of using "the bank's money" to finance your RV.

"Must Pays" are the mill stones we place on our own necks.

Obviously, I have strong opinions regarding debt and its place in the home financial picture. While debt was attractive in the past, it lead to the crash of '08. "Rules of Thumb" do change. Lecture over ...
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Old 07-25-2015, 07:18 AM   #19
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One point that I don't believe has been brought up is the amount of State sales tax that will need to be paid. In Iowa, we pay sales tax of 6% when we initially register our RV's. This tax is based on the amount paid for the RV minus any trade in value. So if the dealer artificially inflates the price paid for the RV, we would pay tax on the inflated price shown on the bill of sale. If this ends up being inflated several thousand dollars, the tax bill could end up being several hundred dollars higher! Not the best way to do business IMHO!
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Old 07-25-2015, 07:41 AM   #20
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One point that I don't believe has been brought up is the amount of State sales tax that will need to be paid. In Iowa, we pay sales tax of 6% when we initially register our RV's. This tax is based on the amount paid for the RV minus any trade in value. So if the dealer artificially inflates the price paid for the RV, we would pay tax on the inflated price shown on the bill of sale. If this ends up being inflated several thousand dollars, the tax bill could end up being several hundred dollars higher! Not the best way to do business IMHO!
LOL, yea; but THAT will be "deductible" in the year paid regardless, provided you itemize!
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