The expenses associated with living in an RV is probably the first question that comes to mind when considering making an RV your primary residence. This is a question with many possible answers because, just like with traditional homes, there is a wide range of lifestyles and costs of living.
The first question to ask yourself is: What kind of lifestyle will you have? Consider that RVs alone vary in price considerably.
If you are considering everything from RVs to camper trailers and fifth-wheels, a new RV can cost anywhere between $15,000 to $300,000. Motorhomes, however, range from $100,000 to $300,000 and the upfront investment would be similar to the downpayment on the house.
While some standard expenses come with living in an RV such as insurance and gasoline, some other expenses will depend purely on the lifestyle you lead. You can be extremely frugal by driving short distances or not at all, parking at free RV camps, resolving to live without internet or cable, Boondocking, and the list goes on.
On the other hand, you can live in a larger, more comfortable and upscale RV, pay for a spot to park and have cable and internet service to make sure you are not missing any of your favorite shows and lead a luxurious life.
Which Costs Do You Need to Take Care Of?
Let’s break down the main expense categories:
As we mentioned, prices on RVs can vary widely. The average monthly payment is around $500. However it can range from a couple of hundred dollars to $900 depending on the model. Used ones range from $5,000 to $15,000, and you have the advantage of not incurring monthly payments.
Of course, the choice will largely depend on your financial situation. If you do not have a steady monthly income, it might be best to buy it up front. However, if you have a reliable source of income, it would probably feel like less of an upfront burden to pay monthly.
The annual registration of your RV is an average of $75 and may be as high as $150. .
There is homeowner’s insurance, there is car insurance, and then there is motorhome insurance which is a combination of both. As with most types of insurance, you can add to your coverage certain extras like roadside assistance, which can be a nice to have add-on when you are on the road..
Most RV motorhome insurances are slightly more expensive than car insurance, averaging around $100 per month.
This is also a category with a wide range of costs. There are free campgrounds for the most frugal RVers, but there are also luxury campgrounds called “resorts.” Depending on the location and amenities offered, a night at an RV camp can cost up to $1,000. While a $1,000/night campground is probably not a long-term living situation, they exist.
A regular campground, comfortable yet not bare bones or luxurious, will run about $500 per month.
The larger the RV, the more gas it will consume, and RVs consume a lot more than a car. Most RVs average 10 miles per gallon of gas. Again, this goes back to the type of lifestyle you will have. If you remain at the same camp or spot for extended periods, gas will not be as significant an expense.
However, if you are going to be constantly on the move, this will be a heavy hit on your expenses. If you are constantly on the move, you can consider a smaller and lighter RV, as they are more gas efficient.
Depending on your RV, you may have to purchase propane for cooking, heating and powering certain appliances. Newer RVs have all electric appliances and heating, which work with an on-board battery and even solar panels. Propane tanks are no more expensive than $50, in case you are utilizing it.
Let’s face it, it is 2019, and unless you are actively trying to get back to nature and live off the grid, you need internet. A lot of people who live on the road work remotely, which means they need the internet to be able to work and produce income.
Most RV camps and resorts offer wifi. You can also have wifi through your current cell phone data plan. Cell phone coverage is sufficiently widespread that using your cell phone as a hotspot it probably the easiest way to get internet in your RV. This also offers the option of turning it off whenever you are not using it, thus, saving precious gigabytes of data.
A heavy data cell phone plan can cost around $150 per month.
If you are going to be living in your vehicle, it is extremely important that it is well kept. Your RV manual will indicate the maintenance schedule recommended by the manufacturer.
Regular maintenance expenses can include oil changes, tires, brakes, and engine. As with a car, breakdowns and accidents do happen. Always keep a rainy day fund when it comes to RV repairs even when stationary for a longer amount of time. You may need to move, or just want to next year and this way you’ll be ready.
Other misc. costs
Expenses such as food and health insurance have not been included above because these are expenses you incur regardless of whether you are living in an RV or in a traditional home. However, it is still important to consider them as they do not go away once you decide to change your living situation.
Depending on your hobbies, you might want to add hobbies and entertainment category to your budget. If you are a theatre fan and will want to see plays at the cities you travel through, it is something to include in your budget. If you are a photographer, for example, camera related expenses should be included in your budget, and so on.
So, is it cheaper to live in an RV than in a house? It certainly could be, but not necessarily.
Some general tips to keep your costs low are: Drive as little as possible. Cook your meals in your RV as opposed to eating out. Park at free campgrounds, and follow the recommended maintenance schedule to avoid costly breakdowns and repairs.
Is it even “legal” to live in an RV?
Yes, it is. The biggest legal concern is parking your RV legally. It is illegal to park in someone else’s property, of course. But did you know you are probably not allowed to park in your own residential property? It is not uncommon for towns, cities and even rural areas to have ordinances that forbid parking mobile homes even in your private property.
The safest option is to park it at designated RV camps.
RVers who are constantly on the move and only need a spot to spend the night, claim even a Walmart parking lot will do. While it is true you can probably get away with it; it is definitely illegal.
Moreover, in very poor neighborhoods where a lot of the population lives in mobile homes, these laws are often not enforced.
Can you claim an RV as a primary residence?
The short answer is yes. According to the Internal Revenue Service (IRS), a property must have three items to be considered a primary or secondary residence: sleeping quarters, kitchen facilities, bathroom with a toilet.
A primary residence is a place where you reside for most of the year. You can only designate one primary residence at a time, with the option of registering a secondary residence. To file your taxes, it is necessary to designate a primary residence.
Under this description houses, condominiums, apartments, motorhomes, RVs, trailers, and boats can be registered as a primary or secondary residence, as long as they have the aforementioned and it is used for personal residence use, not commercial.
What about mail?
How do you receive mail if you are on the road all the time? Fortunately, there are mail forwarding companies that will receive your mail and, every once in a while; they will send it to you wherever you tell them to.
This service costs around $50 per month. You can save the cost by having a family member or friend you trust who can do the same thing a company providing mail forwarding service would.
As a general recommendation, you can set up to receive and pay all of your bills electronically, as long as you have internet access throughout your RVing.
Can an RV be written off on your taxes?
If the RV was purchased with a loan in which the RV is the collateral, the interest payment on the loan, sales tax and vehicle registration fees are tax deductible.
A problem will only arise if you utilize your RV to produce income. An example would be using it to give tours or renting it out when you are not using it. This is an issue that would also arise in a traditional home situation when the homeowner decides to rent out a spare room or conduct their business from a home office.
For tax purposes, the IRS requires the taxpayer to separates the residential portion of the primary residence from the portion that generates an income. Only the residential portion will be eligible for homeownership tax deductions. *Of course, consult your own accountant for personal advice.
How long can an RV be financed?
We have already covered the potential costs of an RV. The loan term will, of course, depend on the cost of such RV and your financial situation. In average, RV loan terms range within 10 and 15 years. For RVs over $50,000, loan terms can be up to 20 years.
If you are buying a new RV, you will most likely be able to get a longer-term loan. The same is true if your credit score is good. To reduce the load of the loan and the depreciation of the RV, it is recommended to do as large as a down payment as you can afford.
Just like you shop around for an RV, you will want to shop around for a loan. 20-year terms are not always as good as they sound. Some loans will bundle the insurance in with it like you would with a house mortgage. While a longer term may make your dreamed RV look more affordable, you will be paying more in interest costs over the length of the loan.