Buying an RV is a serious investment, and any way to save a few bucks on the purchase is generally worth it. There are a few specific ways to save money on an RV, so let’s dive in.
What is the cheapest state to buy a camper? As far as purchasing the actual camper, the cheapest states are Arizona, Texas, and Florida. However, registering an RV is cheapest in Montana, and several other states have benefits like no income tax and/or low insurance costs.
Buying a Camper in a State With No Sales Tax
When you are making a large purchase, like a $100,000 camper for instance, sales tax is a big factor. Some areas of the country have combined sales and local taxes that exceed 10%, which would mean an additional $10,000 tacked onto the price tag. Sales tax is generally assessed based on the location where you will be registering the RV, so basically where your primary residence is.
However, if you live in Montana, Alaska, Oregon, Delaware, or New Hampshire, you’re in luck – since there’s no general sales tax in those states, you won’t have to pay it on your RV. In fact, Montana has no sales tax whatsoever – no general sales tax, no county sales tax, and no city sales tax.
The other four states on that list may assess county or city sales tax, so while the sales tax rates are generally low, they are only non-existent in Montana.
If you are a resident of any other state, you will almost always need to pay sales tax on your camper purchase regardless of where you buy it, whether the camper is new or used. In some states, the tax rate is based solely on retail value while in others it’s based on weight or vehicle class. There may also be additional wheel taxes and even annual personal property taxes as well.
Know The Laws Regarding Buying a Camper Outside Your Domicile State
Although we mentioned earlier that you will need to pay sales tax on your camper purchase based on the rates in your home state, there are a few loopholes where you are allowed to purchase an RV outside your domicile state and pay a different tax rate.
For example, the state of Montana allows you to purchase and register an RV there, even if you don’t live there. However, to take advantage of this offer, you need to create an LLC in Montana and register your new RV as a business vehicle.
There are companies that can complete this process on your behalf, and they often charge around $300 – a huge discount compared to potentially 10% of your RV cost!
But, your home state may not be thrilled if you decide to register your RV in Montana to avoid paying sales tax to the state you reside in, and it may be more difficult to obtain insurance for your RV.
You’ll likely either have to insure the RV in Montana or add coverage for your Montana LLC on your existing policy. And, should you ever have to make a claim on the policy, you might run into a lot of red tape and hassle.
If you plan to go full-time in your RV or camper, you can selectively choose your new “domicile” state in order to take advantage of low sales tax, income tax, registration fees, and insurance costs – more on full-time living in just a bit.
Finally, keep in mind that several states will enforce sales tax collections on vehicles that have been purchased and registered in one state and then moved into another state within a certain time period.
These states include California, Nebraska, Wyoming, Massachusetts, Minnesota, and Iowa – so don’t try to game the system by “moving” to another state for a few weeks to purchase your RV on the cheap and then returning to any of these states shortly afterwards.
Don’t Forget Camper Insurance Costs
RV insurance costs also vary by state. Maine has the cheapest insurance rates of any state, although the sales and property tax is relatively high, which can negate this benefit.
However, South Dakota has slightly higher (but still low) insurance rates, and there’s low sales tax and no personal property taxes, so over the long term it usually works out to be cheaper. For that reason, South Dakota is a popular domicile state for full-time RVers.
If you aren’t going to be full-time, it’s still worth it to shop around at various insurance companies in your home state. Often it’s cheapest to add RV insurance to your existing policy, but not always.
In fact, it’s a good idea to consult an insurance agent who specializes in RV coverage. You can choose from different coverage levels based on your needs and the value of your RV. For instance, if you purchase an inexpensive used RV and only take it out a few weekends per year, you likely don’t need the gold standard of RV insurance.
However, if you purchase a brand new $500,000 Class A and plan to go full-time in it, you will likely want more comprehensive coverage.
Remember that beyond just insuring the RV itself, you will need to insure the contents of the RV – like your personal belongings and anything that comes with you in the RV on your travels. Depending on your situation, your RV insurance may need to cover your personal belongings or those may fall under your homeowners or renters insurance.
If, god forbid, your RV is stolen or completely destroyed in a catastrophic event, you will want your insurance policy to be able to reimburse you for the rig as well as all your possessions.
Be sure to review the actual cash value, agreed value, deductible, total loss replacement coverage, and all other terms of the insurance plan before you select one.
If you plan to go full-time in your RV, there’s really no reason to keep your residency in a sub-optimal state. Instead, you can change your domicile state to one that offers better income and sales tax rates, insurance rates, registrations fees, and so forth. However, this is a bit of a process to ensure that you have legitimately changed your domicile.
Otherwise, you may run into trouble if your old home state claims you owe them taxes, if you make a claim on your health or vehicle insurance and they refuse to cover you since your domicile state isn’t accurate, if you get sued in a state where you thought you were no longer domiciled, if you want to run for political office in your new state, or if you die and your will is challenged by a new state.
Long story short, it can get complicated!
Choose Your New Domicile Strategically
For full-time RVers, the best domicile states are generally Texas, Florida, and South Dakota. However, each state has its own unique pros and cons.
Consider for your own situation how easy it will be to deal with the new state, the taxes, the state infrastructure (health and vehicle insurance, etc.), and whether you will pass through the state regularly on your travels – this is necessary as we’ll cover in the steps to change your domicile state section.
Consider Income Tax
Income tax rates can be a big factor for full-time RVers. There is no income tax in Texas, Florida, or South Dakota, although several other states have this benefit as well.
Low Registration/Title/Renewal Fees
Registration fees can be quite expensive each year, depending on what state your vehicle is registered in. Montana has an excellent policy – low annual fees and, if your vehicle is more than 11 years old, you can opt for a permanent tag and avoid annual fees altogether! Again, the best state for this will depend on your exact situation.
10 Steps to Change Your Domicile State
There are 10 main steps to complete in order to legitimately and legally change your domicile state:
- Obtain a “permanent address” in your new domicile state. This will be the address that you use on any official paperwork that asks for an address. There are several organizations that can help you set up a permanent address, such as Escapees.com.
- Register your vehicles in your new state. With your new address, you can re-register your vehicles in your new state. If you choose Texas as your new domicile state, you’ll need to have the vehicle inspected before you can complete your registration.
- Get a new driver’s license. You’ll also need to turn in your old driver’s license and get a new one in your new domicile state. Depending on how big your RV is and what state you choose, you may need to take a non-commercial test for your new driver’s license.
- File an affidavit of domicile. This isn’t the end-all-be-all solution for domicile change, but it should be done as soon as possible – certainly before there is any challenge to your domicile status.
- Register to vote in your new state. You can likely set up your voter registration as absentee, so you can just mail in your ballot from wherever you are on the road. However, you do need to register in your new state as part of your domicile change.
- Change your domicile state on all your legal documents. This includes your estate documents such as trusts and powers of attorney. Since the estate laws vary by state, it’s easiest to head any problems off ahead of time by simply changing your domicile to avoid any legal snafus.
- Spend some time in your new state. While there’s no hard and fast requirement regarding the number of days that you must spend in your new domicile state, it’s a good idea to spend at least some time each year there. So, it’s wise to choose a state that you will regularly pass through in the course of your travels.
- Create new professional relationships and accounts. You will need to move things like health insurance policies, primary care offices, dentist offices, and so forth to your new state in order to deflect any challenges to your domicile change.
- Create new social connections. The same concept applies for social connections, like gym memberships, club memberships (Rotary Club for instance), library membership, and so forth.
- Move your storage unit. If you have a storage unit containing belongings that don’t travel with you in the RV, it’s a good idea to move them to a unit in your new domicile state.
If you follow these 10 steps, for all intents and purposes your domicile has well and truly been changed! While you may not expect your domicile state to be a big deal, you can get into a sticky situation if you try to take advantage of tax breaks without actually committing.
Up Next In Campers: