SoonToBe FT - Purchase / Finance / Tax Questions

[Chad]

Hello all!  My wife and I have been researching RV's and planning on switching to FT RV since Jan of this year.  LOTS and LOTS and LOTS of research and planning!  Our goal is to (hopefully) buy our RV in Q1 2018 and I have some questions for all of the experienced Full Timers out there:

My job is full time remote and I am a Florida resident and native, so no issues with FL for my income tax situation... But what about sales tax when purchasing the RV?  Has anyone here ever changed their domicile to save on sales tax?  We're looking at around $200K for an RV so that's a LOT of sales tax.  From what I read, SD is 3%?  $7K savings (FL is 6%) is nothing to sneeze at!

My other question revolves around financing the RV and selling our home:  We've heard from several people (albeit sales people), that it's best to purchase the RV BEFORE we sell the house, then sell the house after (for easier approval and lower rate).  But reading on here and various forums, that opinion seems to be split.  I also see that, for some reason, Good Sam's RV Loan Rates are actually LOWER for Full-Time RV loans.  While we're still hoping to have a choice in regards to selling before or after, but we may need to sell the house and cash out the equity for our down payment.  Thoughts on this?

How about FL vs SD for Insurance?  Note:  I won't mess around with trying to *trick* an insurance company into thinking we're part time.  Not looking to be deceitful or illegal here in any way.  We just want to put ourselves in the best situation to save money where we can.   If that means selling the house and moving to SD for a couple months and buying the RV there, it's doable.

Looking forward to joining the FT Club next year!  Thanks to anyone taking the time to read and reply!

-chad

 

 

[TreyandSusan]

A few resources...

RV-Dreams - Consider any of Howard and Linda's Rally/Seminars Extremely valuable Resource. (Especially for these particular questions)

RVSEF Educational Conference - Better for RV Technical Information Extremely valuable Opportunity

[Zulu]

What will you be doing for health insurance?

[Chad]

5 minutes ago, Zulu said:

What will you be doing for health insurance?

I have coverage through my employer.  I'm 100% telecommuter.

[Chad]

35 minutes ago, TreyandSusan said:

A few resources...

RV-Dreams - Consider any of Howard and Linda's Rally/Seminars Extremely valuable Resource. (Especially for these particular questions)

RVSEF Educational Conference - Better for RV Technical Information Extremely valuable Opportunity

Good stuff!  I'd already read most of the site but re-read it anyway.  Their situation gave them enough equity from the sale of the home to purchase an RV outright.  We'll be swapping Mortgae for RV payment, so my question has more to do with timing.  Selling the house prior to buying (financing) the RV is preferred in that there' s no overlap (paying mortgage and RV at the same time), so long as there's not some hit financially in terms of the RV loan (higher interest / tougher approval).

I've also read about forming am LLC in SD (for no sales tax), but the posts are old.  Is that still a thing?

[Kirk W]

First of all, welcome to the Escapee forums! While you are browsing the Escapee site, make sure that you also check out the X-scapers section as it is designed for the working RV traveler. 

1 hour ago, Chad said:

But what about sales tax when purchasing the RV?  Has anyone here ever changed their domicile to save on sales tax?

Many people do change domicile for that or other tax issues but realize that a change of domicile means a change of everything and not just selected items, each in the state where cost is least.  Let me suggest that you take the time to read this article on domicile selection that was published in the Escapee Magazine. It may be helpful in your research.

1 hour ago, Chad said:

We've heard from several people (albeit sales people), that it's best to purchase the RV BEFORE we sell the house, then sell the house after (for easier approval and lower rate)

 

It has been quite some time since we last financed an RV but I can tell you that when we last did so, lenders did generally give a better rate to home owners. At this time there is a company which has affiliated with the Escapees RV Club that gives club members a discount and has a very good reputation. That company is Alliant Credit Union and I think that you should contact them soon.

1 hour ago, Chad said:

While we're still hoping to have a choice in regards to selling before or after, but we may need to sell the house and cash out the equity for our down payment.  Thoughts on this?

You haven't said what your age is but this to me depends a great deal on your future plans. It is important to understand that if you spend all of the receipts from the sale of your house on the RV, you will probably not recover that money if you should change your mind and not stay in the RV lifestyle for a long time. While most stick houses do increase in value over the long term, RVs lose value each year and most of us recover far less than what was spent on the RV when we sell. The relation of the purchase price to sale price is very similar with an RV to that of an automobile. 

As to learning resources, you will find none better than to attend the Escapees RV Boot Camp that is run several times each year. 

[Chris-n-Dennis]

Considering your location may I suggest you take another look at that sales tax position? Yes, you would save 3% in sales tax in SD but that savings can be negated simply by increased registration and/or insurance fees. Example: we are Washington residents with 8.5% sales tax. Yes it cost us more upfront but if we had switched to SD it would actually cost us $800 more per year in registration and RV insurance. 

If you can afford doubling up on a mortgage payment or two, buying the RV before the sale of the house could be the wiser move. First is the loan options/rates you may get and another is tax positioning as the RV is a 2nd home so there could be significant deductions on th purchase. Consult a tax professional.

[Chad]

Thanks, Kirk!

So, the Xscapers is geared more for non-retired full timers?  The relationship between escapees, xscapers, and rv network is really confusing.  Are they all one club / network?

I agree on calling  a lender soon to get their take on applying with and without a house.  I'll certainly check out Alliance and Good Sams.  USAA also does RV loans, but I think only 15 years.

I am 48 and far from retiring.  

[sandsys]

2 hours ago, Chad said:

While we're still hoping to have a choice in regards to selling before or after, but we may need to sell the house and cash out the equity for our down payment.  Thoughts on this?

We took out a home equity loan to buy the RV then paid if off at closing on our house. But, things have changed a lot since we sold in 2008. You might see if that is still an option.

Linda Sand

[Zulu]

3 hours ago, Chad said:

I have coverage through my employer.  I'm 100% telecommuter.

Check your insurance policy. It may only apply to your current domicile.

[Chad]

51 minutes ago, Zulu said:

Check your insurance policy. It may only apply to your current domicile.

That's a good point.. It is a Florida policy.  However, I think sticking with FL is best anyway, so that part of my query is answered.  Way too much trouble and red tape for a potential 3% savings.  

[Kirk W]

1 hour ago, Chad said:

So, the Xscapers is geared more for non-retired full timers?  The relationship between escapees, xscapers, and rv network is really confusing.  Are they all one club / network?

It is all part of the Escapees RV Club and joining Escapees makes you a member with access to all parts. The entire idea was to make a new place for the younger members to exchange ideas and make social contacts with others that are still working and/or nearer to their age. It is also a place for families to gather. No part of the group is exclusive to any particular group nor is any group excluded but it does mean that there are now places to gather and discuss work and family issues, just as we spend a lot of time discussing things related to retired living and grandparenting. Most of us to venture into both areas at least at times, but we tend to spend most time where we find the most in common. 

I happen to be a major supporter of the X-scaper side because there is now a place that our RVing son finds that he fits better than existed before it was started. We do still share a great deal in common. An example is that each year at Escapade, there is the option of parking in general parking, or with the solos, the boondockers, or with the X-scapers. By parking, with X-scapers you also have good access to the Kids-capade, which is the kid's area and they set up a co-op for adult leadership so that parents do not have to keep the kids with them or entertain them, yet the kids have a great event as well. We all share the same seminars and entertainment for the most part but the campground gatherings & socials tend to be mostly common interest/age groups.  You know if you choose to park with or attend an X-scapers event that  there will be kids around and many of them. (It has been a wonderful new feature!

[Chad]

14 hours ago, Kirk Wood said:

It is all part of the Escapees RV Club and joining Escapees makes you a member with access to all parts. The entire idea was to make a new place for the younger members to exchange ideas and make social contacts with others that are still working and/or nearer to their age. It is also a place for families to gather. No part of the group is exclusive to any particular group nor is any group excluded but it does mean that there are now places to gather and discuss work and family issues, just as we spend a lot of time discussing things related to retired living and grandparenting. Most of us to venture into both areas at least at times, but we tend to spend most time where we find the most in common. 

I happen to be a major supporter of the X-scaper side because there is now a place that our RVing son finds that he fits better than existed before it was started. We do still share a great deal in common. An example is that each year at Escapade, there is the option of parking in general parking, or with the solos, the boondockers, or with the X-scapers. By parking, with X-scapers you also have good access to the Kids-capade, which is the kid's area and they set up a co-op for adult leadership so that parents do not have to keep the kids with them or entertain them, yet the kids have a great event as well. We all share the same seminars and entertainment for the most part but the campground gatherings & socials tend to be mostly common interest/age groups.  You know if you choose to park with or attend an X-scapers event that  there will be kids around and many of them. (It has been a wonderful new feature!

Thanks, Kirk!  I appreciate the explanation.  That makes sense now..

[SKP073615]

On 8/29/2017 at 6:19 PM, Chad said:

That's a good point.. It is a Florida policy.  However, I think sticking with FL is best anyway, so that part of my query is answered.  Way too much trouble and red tape for a potential 3% savings.  

Make sure that your insurance has decent coverage outside of Florida.  So much insurance coverage these days is based on  limited geographical networks of providers.  It is getting hard to find insurance that has good nationwide benefits.

Art

[Big Greg]

When we purchased a new F350 in December 2013 the SD sales tax was 3% on the difference between the new truck purchase price and the trade in allowance on the old truck.

It is no longer 3%.

"The South Dakota state sales tax rate is 4%, and the average SD sales tax after local surtaxes is 5.83%.

• Counties and cities can charge an additional local sales tax of up to 2%, for a maximum possible combined sales tax of 6%
• South Dakota has 142 special sales tax jurisdictions with local sales taxes in addition to the state sales tax"

[Kirk W]

13 hours ago, Big Greg said:

South Dakota has 142 special sales tax jurisdictions with local sales taxes in addition to the state sales tax"

In TX when you buy a vehicle, only the state sales tax(6.25%) is applied, even though there are frequently local option sales taxes on general merchandise. 

[Chad]

11 hours ago, Big Greg said:

When we purchased a new F350 in December 2013 the SD sales tax was 3% on the difference between the new truck purchase price and the trade in allowance on the old truck.

It is no longer 3%.

"The South Dakota state sales tax rate is 4%, and the average SD sales tax after local surtaxes is 5.83%.

• Counties and cities can charge an additional local sales tax of up to 2%, for a maximum possible combined sales tax of 6%
• South Dakota has 142 special sales tax jurisdictions with local sales taxes in addition to the state sales tax"

Yea.. I think I've already written off the SD / Tax thing.

So, my last question (I know it's a fringe subject), is in the realm of an LLC purchasing the RV and avoiding sales tax completely (Montana and some other states I believe).  Most of the things I've read on the subject are 8-10 years old.  Is this an avenue that's been closed for the most part?

[Chad]

3 minutes ago, Chad said:

Yea.. I think I've already written off the SD / Tax thing.

So, my last question (I know it's a fringe subject), is in the realm of an LLC purchasing the RV and avoiding sales tax completely (Montana and some other states I believe).  Most of the things I've read on the subject are 8-10 years old.  Is this an avenue that's been closed for the most part?

Add: From what I've read on the subject, most problems arise from using the LLC *solely* for the purpose of the RV.  I have a venture directly related to the RV that would be it's own real money making company that isn't currently an LLC (still in planning).  But if this were still a viable option, I would have an LLC for a business venture that would also buy the RV.  .. If that changes things...

[Kirk W]

9 minutes ago, Chad said:

So, my last question (I know it's a fringe subject), is in the realm of an LLC purchasing the RV and avoiding sales tax completely

Montana is the only state that I'm aware of who encourages that type of use and not all domicile states allow that to be done legally. Keep in mind that you need to meet the legal requirements of the state you claim as domicile as well as those of the state where you make the LLC. I strongly recommend that you contact the Bennette Law Office in MT and discuss it with them as they will tell you if you do not fit the requirements to gain by this and when they advised me against using one, they didn't charge me anything.  It is much better to get advice from an expert than hearsay from we shade tree lawyers. 

[TheLongWayHome]

On LLC talk with an attorney in your planned domicile state to understand their specific laws relative to taxes and out of state LLCs. Do not rely on the forum, including current LLC owners and law enforcement personnel on here. Their knowledge is specific to their circumstance or local/state laws where they live/practice.

An article with some good general advice and information below, BUT go talk with a competent attorney!! 

http://www.jackdanmayer.com/registration_and_legal_issues.htm#LLC Option

[Chad]

I came across that same law firm from another thread.  Going to contact them as well as a local attorney.  If it's possible (and 100% legal), I might be in a good position to take advantage of it.  I'll follow up with what I discover.

Thanks!

[Hobo John]

I've been following this thread and i am a bit confused. I always thought that sales tax is determined by the location of the sale and not the residence of the purchaser. 

Please help me understand where i am wrong.

Thanks

[Kirk W]

2 minutes ago, Matilda's mate said:

I always thought that sales tax is determined by the location of the sale and not the residence of the purchaser. 

The answer to that question is "yes." In the case of general merchandise that is always true but for vehicles it has long been the practice that the sales tax is paid in the state where that vehicle is to be titled and registered. In recent years, with state budgets tight, some states have ceased to do that and insist upon collecting sales tax on all vehicles sold in their state and most states will give the person registering a vehicle credit for the amount of sales tax paid in the state of purchase, but that isn't true in every state either.  For the most part, it is still true that you pay the sales tax in the state a vehicle is titled and registered in, with only a few exceptions. 

[Chad]

7 minutes ago, Matilda's mate said:

I've been following this thread and i am a bit confused. I always thought that sales tax is determined by the location of the sale and not the residence of the purchaser. 

Please help me understand where i am wrong.

Thanks

Sales tax is paid when registering the vehicle, which is typically done at time of purchase and many times the costs are rolled into the purchase.   However, registration (and the taxes therein) are still a separate.

[Big Greg]

In 2013 when we purchased our truck in FL and were SD residents the FL dealer collected the SD sales tax, filled out the SD forms I obtained, and sent the forms and tax to SD.