With the summer fast approaching, you may be planning to buy an RV to tour parts of the country or cruise local waterways in a boat. Assuming the vehicle or vessel costs you a pretty penny, you may have to borrow some cash to complete the deal. Pleasant tax surprise: You may be eligible for mortgage interest deductions if you itemize on your 2026 return.
Although mortgage interest is commonly associated with a dwelling on a plot of land, it can also be deductible for a “home” that hits the roads or sails the seas. The key is to satisfy the conditions stated by the IRS.
Details: Generally, you can deduct mortgage interest for acquisition debt paid to buy, build or substantially improve your principal residence and one other home, within generous limits. For instance, the second home can be a vacation home on a lake or coast or a lodge or cabin in ski country. Currently, the limit on new acquisition debt is the first $750,000 of interest paid, down from the previous limit of $1 million. (Older debts over the limit may be “grandfathered” under prior rules.) The $750,000 threshold was recently extended by the One Big Beautiful Bill Act (OBBBA).
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There’s nothing prohibiting the owner of an RV or boat from claiming the luxury item as a second home if certain requirements are met. The IRS says that the RV or boat must have sleeping, cooking and toilet facilities. Usually, an RV is specifically designed to accommodate these functions. As a result, it may easily qualify for the mortgage interest tax break if the acquisition debt falls within the limits.
Taking a deduction for a boat may be a closer call. If the boat has a galley, sleeping quarters and a head, you should be OK. But you can’t just toss a sleeping bag down below and call the boat a home. Similarly, the IRS won’t permit deductions for most sailboats or speedboats.
Remember that you must itemize deductions to take advantage of this tax break. You can’t squeeze through the tax loophole if you opt for the standard deduction.
Also, be aware that you may also claim a deduction for state and local tax (SALT) payments for an RV or boat. Previously, you could deduct the full amount of SALT payments, but this write-off was annually capped at $10,000 for 2018 through 2025. The OBBBA increases the annual dollar cap to $40,000—four times the previous level—for 2026 through 2029. But the $40,000 cap is reduced for high-Income taxpayers down to a minimum of $10,000. The regular $10,000 cap returns for good in 2030.
Note that you can normally deduct sales tax as part of your SALT deduction using actual receipts or an IRA table based on the state of your residence and family size. The IRS table will generally produce a smaller deduction but is more convenient. Silver lining: You can deduct the actual sales tax for vehicles and vessels in addition to the regular table amount.
In summary: The outcome is not aways clear-cut. Rely on professional advisors to navigate all the tax rules to provide the maximum deductions.
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Tags: deductions, Income Taxes, IRS, mortgage, mortgage interest, tax breaks, Taxes
