A bipartisan commission appointed by President Bush recommended in late October that the mortgage interest tax deduction be replaced with a 15% tax credit for first mortgages and abolished with regard to second mortgages. The proposal also would do away with the deduction for state and local taxes.
But doing away with the tax deduction for interest on second mortgages wouldn’t necessarily harm the RV industry, according to David J. Humphreys, president of the Recreation Vehicle Industry Association (RVIA).
“It would be undesirable,” Humphreys told RV Business. “But as long as RVs are linked to whatever happens to second mortgages, everything should be OK.”
Tax laws consider RVs to be second homes and allow interest paid on mortgages to be entirely deductible, as are first mortgages.
Humphreys said he and RVIA Chairman Bruce Hertzke, chairman and CEO of Winnebago Industries Inc., Forest City, Iowa, already have had discussions about how the manufacturers’ group would proceed in the event the commission’s recommendations receive serious consideration – a likelihood not considered high by many observers.
“The best (RVs) can do is get the same treatment as all second homes,” Humphreys said. “If we get peeled off and treated differently, that would be a serious problem.”
Mike Molino, president of the Recreation Vehicle Dealers Association (RVDA) said the thought of changing the way mortgage interest is treated for tax purposes is not a good idea. “The deductibility of mortgage interest helps drive the economy – not just the RV industry,” Molino said, dismissing the viability of the proposal. “I don’t think we should take this too seriously until it has more traction. We will have a lot of allies if we have to take this one on.”
Humphreys noted that there were predictions that the auto industry would be harmed when the law was changed to do away with tax deductions for interest on vehicle purchases. “And that didn’t happen,” he said.