Pay Your Taxes - 3 Tips for Purchasing Your RV Out of State

We made a few mistakes when purchasing our new RV that added up to unexpected costs after the sale.

If you are about to purchase a new RV, you may or may not find the camper of your dreams in your home state.  No problem.  These kinds of things happen all of the time.  However, no matter what you purchase and where you purchase, taxes are a fact of life.  Don't get stuck holding the bag when you get to your home state's tax office.

What are the tax laws in your state for out of state purchases?

Know the Local Laws in Your Home State

Before you do anything, make sure that you know the laws in your home state about out of state purchases of vehicles and RV's.  Every state will have laws that govern this process.  You can start at your local tax assessor's office.  Ask for a copy of the statute for out of state purchases on RV's. Have these items in hand when you start the paperwork at your RV Dealership.  In Mississippi, this is called a Use Tax.

For example, you may have to pay taxes on your purchase in two states.  However, some states will give you a credit for the tax paid in the state where you purchased.  Mississippi does not do this.  If you pay taxes in another state on vehicles and trailers, Mississippi does not give you a credit on the taxes that you paid in another state.  Mississippi charges 7% sales tax.  We also paid a 2% sales tax in Alabama.  This was held out of the final taxed amount of our purchase (that 7%).  So when we got to our local tax office, that $493 we paid to Alabama was not credited toward our Mississippi tax.  We owed that amount in addition to our RV tag that we were purchasing.

You need to know the rate of tax for both states - your home state and state where you are purchasing.

Know the Rate of Tax

You need to know the rate of tax on your purchase both in your home state and in the state of origin.  Double-check the math and make sure that it is all done correctly.  This all goes back to the laws governing taxes in both states.  Your home state will have an amount of tax and the state of origin will have an amount.  Know both and check the math.

Sounds rude maybe, but you don't want an unanticipated bill coming at you for several hundred dollars.  We were caught off guard.  We should have anticipated 9% sales tax in the end.  7% for the state of Mississippi and 2% for Alabama.

Have a point of contact at the local tax office that can help you and talk to the dealer where you shop.

Have a Local Contact at Home Tax Office

Have the contact information for someone at your local tax office that you can provide to the dealership.  Don't just trust that this is all going to be done correctly.  I don't think that errors like this are made in malice.  But, after all, you are responsible for those taxes.  The tax office personnel in your home state can be a real asset.

The lady in our local tax office went through this painful process with me helping me to sort it all out after the fact.  If I had worked with her during the process, I could have avoided nearly $500 in additional taxes that I wasn't anticipating.

After endless emails and phone calls, it was apparent that I was going nowhere.  The dealership made a big error, and I was left to pay that bill.  And if you make this error, you probably are too.  I'm going to be salty over this one for a while.  That's a lot of money and a big miscalculation.  I should have done more homework and so should the dealership.  So, we are both at fault here.  Hopefully, this can help you avoid this mistake.

In summary,

1. Call your local tax office and find out the rate of taxes on your RV purchase.
2. Find out what statutes apply to taxes when purchasing an RV out of state.
3. Collect the contact information of the person at your local tax office to share at the dealership.
4. Double-check all of the math before you sign on the dotted line. 
5. Finalize your deal and smile because you have done your homework!

I'm still super happy with our new RV.  It was the right purchase, and we can't wait to really start getting our new girl out on the road.  There is a lot of learning to be done with a new RV.  Even with the mistakes that we have made along the way, we love this life!

Until next time,

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