President Trump has signed the Tax Cuts and Jobs Act. The bill quickly made its way through both the U.S. House and Senate with limited amendments.
Here are some highlights of interest to RV dealers:
Corporate Taxes Establishes a top rate of 21% for corporations starting in 2018 and 20% for “qualified business income” of certain small businesses that pass on profits to owners and are taxed at individual tax rates.
Mortgage Interest Deduction Allows mortgage interest deduction on loans totaling up to $750,000 for primary residence and second homes, including RVs.
Business Interest Expense For business with more than $25 million in gross receipts, net interest deduction is limited to 30% of earnings before interest, taxes, depreciation, amortization, and depletion, through 2021. The law allows full deduction of all floor plan financing interest expenses for motorhomes. Travel trailer floor plan financing expenses would be subject to the 30% limit. RVDA and its allies will be working to adjust this provision in 2018. Again, small businesses under $25 million in gross receipts are exempt from the interest deduction limitations.
Estate Tax Increases exemption to $10 million ($20 million for a surviving spouse); indexed for inflation; expires in 2025. This summary is provided to dealers as an informational overview of the tax reform law, not as tax advice. Consult your tax advisor to address specific tax advice questions. RVDA will provide additional information as it becomes available.
Courtesy of RVDA