When it comes to purchasing an RV, everyone is looking for a good deal. But are some states actually cheaper to buy an RV? While there are some laws to consider, the short answer is: Yes, and it’s Montana.
Generally, the law is that you should register your vehicles wherever you have a domicile or your home state. Montana is the only state that still allows people to purchase and register a vehicle there, without residency.
You do however need to create an LLC in Montana and register as a business vehicle in the state. There are service providers that will take care of navigating this whole process for you which typically costs about $300.
Why would you want to register your vehicle in another state though?
Typically you have to pay sales tax, and often a county or city tax, based on the location where you are registering the vehicle.
Montana has absolutely zero sales taxes. No general sales tax, no county tax, no city tax. This is what makes it the cheapest state to buy an RV.
If you already have residency in Alaska, Delaware, New Hampshire, or Oregon you’re in luck because those states also have no general sales tax. However, these 4 states won’t let you register there without residency, and you cannot purchase an RV in one of these states and register it in your home state without having to pay your local taxes.
Some state taxes are based on retail value, others add-on for weight, and some are based on the vehicle class. So if you’re looking to buy a high value, heavy, Motorhome, the taxes can really add up!
Some states charge upwards of 10% for state and local tax, so if you’re purchasing a new $500,000 Monaco Motorhome, the tax would be $50,000. This sales tax savings is even applicable if you are purchasing a new RV or a used RV.
None of this even considers registration fees and title, which can also add up. But all in all the more expensive the vehicle, the more savings to make it worth the hassle. So a motorhome may be more worth it than a small travel trailer, for example. Even some people buying a car, like an expensive exotic car, will consider the Montana LLC route.
Buyer Beware: Make sure you understand your local laws. There are several states including California, Nebraska, Wyoming, Minnesota, Massachusetts, and Iowa that enforce sales or tax collections on the vehicles that have been brought into the state within a certain period of buying it in another state.
Now we’re not really suggesting that you avoid paying the appropriate taxes, but many RV owners are also full-timers and could consider changing their domicile to take advantage of tax breaks.
Montana is still the clear winner in this regard, and they even offer a permanent tag once the vehicle is over 11 years old and you never pay registration fees again. They do still have income tax though, so take that into consideration for your domicile.
If Montana isn’t the right fit for you, Texas, South Dakota, and Florida are all also popular domiciles for full-timers, that offer both no income tax and low sales tax. Texas sales and use tax is 6.25%. South Dakota sales tax is 4.5% and the registration fees are quite reasonable. Florida has a 6% sales tax and bonus: no vehicle inspection is required.
Lastly, while not a state, RV Shows can be a place to score a deal on a new RV. Major RV shows with multiple manufacturers will be competing for the business and eager to make sales.
There are dozens of variables and every new RV owner has to decide what is the best fit for their situation, but the bottom line is this: do your research, explore your options, and save some money if you can!