In this article, we will answer the following question: Do you have to tax a caravan? We will discuss what taxes you have to pay when you are buying, registering or renting a caravan.
Do you have to tax a caravan?
No, you do not have to tax a caravan. Caravans, being trailers, and not having an engine, are included among low-emission vehicles and are exempt from road tax. In the US, there is no federal road tax, but you will have to pay sales tax and a city tax when purchasing a caravan or RV.
Currently, the five states where you do not have to pay any tax for a caravan are:
- New Hampshire
The states with the lowest tax for a caravan are:
Note: This doesn’t mean that buying a caravan is one of these states that will save you from paying any taxes! For example, if you buy an RV in Oregon, but record in California, you will have to pay taxes in the state the motorhome is registered!
Please see the table below for more information on how much is the tax rate in each of the 50 states.
Vehicle Purchase Tax Rates in the USA
|State||Purchase Tax Rate|
|2% + county rate+ city rate = total|
|Alaska||0% + municipality|
|Arizona||5.6% + county + city|
|Arkansas||6.5% + county + city = rate on 1st $2,500— plus —6.5% on balance = total0% on vehicles priced at $4,000 or less|
|California||7.25% + local|
|Colorado||2.9% + county + city + district = total|
|Connecticut||6.35% for vehicle $50k or less7.75% for vehicle over $50,000|
|Delaware||4.25% “Motor Vehicle Document Fee”|
|District of Columbia||“Excise Tax” varies by weight & mpg0% for electric vehicles|
Ohio5.75% + localOklahoma3.25% excise tax plus 1.25% sales tax = 4.5% total for new vehicles$20 on first $1,500 + 3.25% excise tax on balance + 1.25% sales tax on full price = total for used carsOregonUsed Vehicles: 0%New Vehicles: 0.5% (One-half of 1 per cent)Pennsylvania6%7% for Allegheny County8% for the City of PhiladelphiaRhode Island7%South Carolina5% ($500 max)South Dakota4% “Motor Vehicle Excise”Tennessee7% + local rate on first $1600 + 2.75% single article tax on second $1600 (to $3200) = total
Texas6.25%Utah4.85% + localVermont6%Virginia4.15% ($75 minimum)Washington6.5% + local + 0.3% “motor vehicle sales / lease tax” = totalWest Virginia6%Wisconsin5% + countyWyoming4% + county
Do I have to pay council tax if I live in a caravan full-time?
Yes, you will have to pay council tax if you live in a caravan full time. However, the amount wouldn’t be as high as it would be if you live in a house or apartment. The other good news is that the amount you are taxed for the property is almost always deductible.
If you make the caravan your official residence or if you claim it as your second home – it doesn’t make too much of a difference. You will pay property tax, but the interest paid throughout the year is deductible.
Can you claim back tax if you live in a caravan?
Yes, you can claim back tax and apply for RV tax deductions if you live in a camper, caravan, RV or any other type of motorhome.
Here are some ideas:
- If the motorhome is registered as your second home, apply for a home mortgage interest deduction (your bank will be able to advise you on the terms and conditions);
- Claim back any expenses and millages while travelling with your motorhome for a business trip;
- If you rent your caravan or RV, deduct any expenses related to the maintenance, repairs, furniture buying and other expenses.
- You can also apply for an RV sales deduction tax if you purchased your motorhome with cash and you don’t pay interest on a loan.
We recommend you consult a financial advisor before making any claims but do take into consideration the above schemes.
Do you have to pay taxes when renting a caravan?
The taxes that a caravan pays can be classified into those that are mandatory when registering it and those that are needed once we have already registered the caravan. If you are renting your vehicle, there are indeed certain taxes that you must pay.
- VAT: Since you are considered an entrepreneur for VAT purposes, you will have to comply with the following obligations:
- Bring the output VAT book (here you will list your income invoices) and the input VAT book (here you will list your expense invoices). Only in the event that you acquire an investment property should you also keep the investment property book.
- You must submit the VAT form quarterly, where you will reflect the VAT that you charge on your invoices and the VAT that you pay on your invoices for deductible expenses.
- Finally, and once a year, you must submit the annual VAT summary.
- Personal income tax: For the purposes of personal income tax, you are not considered an entrepreneur, so the benefits you obtain with the rental of your motorhome must be reflected in the section on income from movable capital.
Note that I have spoken of benefits not income, therefore, to calculate the amount for which you must pay you must perform the following operation:
From the total income received (adding the taxable bases of all the rents), the taxable bases of the expenses that are considered deductible for the management of the motorhome rental must be subtracted.
- Deductible expenses for the calculation of the benefit: To reduce the profit obtained with the rental, it is highly advisable that you keep track of the expenses you have to incur in order to manage the rental of your motorhome.
Next, I list the most common expenses:
- The cost of the commission charged by the platform. Specifically in this case the amount amounts to 4% of the price of your rental.
- Vehicle insurance. You can consider as a deductible the proportional part of your insurance based on the rental days.
- Complimentary insurance, if you take out complementary insurance to yours mandatory when renting your motorhome.
- Housekeeping. If you use an external cleaning service after each rental.
- Maintenance expenses. Depending on the number of kilometres travelled in the rental periods of the motorhome, you could justify including as a deductible expense a proportional part of the workshop invoice for the maintenance and set-up of the vehicle.
The bottom line
We remind you that the caravans, being trailers, and not having an engine, are included among low-emission vehicles and are exempt from road tax. In the US, there is no federal road tax, but you will have to pay sales tax and a city tax when purchasing a caravan or RV.
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FAQ on Do you have to tax a caravan?
Do I have to pay tax if I rent out my caravan?
Yes, you will have to pay tax if you rent out your caravan. Rent money is still considered income, no matter your status.
How to choose the right caravan?
To choose the right caravan, it is also necessary to look at two important criteria: the authorized total vehicle weight (GVWR) and the authorized total weight. The GVWR indicates the actual maximum weight added that can reach your car and the caravan.
How to buy a used caravan?
To know everything about the past life of your future caravan, here are the good questions to ask your salesperson. There are three documents that the seller must give you: registration card, sales certificate and situation certificate … There is no technical inspection for caravans.