How To Avoid Sales Tax On An RV
Have you been saving up to buy a recreational vehicle? Anyone looking to purchase a vehicle knows how expensive sales taxes can be, especially for more expensive vehicles like RVs.
Luckily, you can enjoy unique perks when registering your vehicle in Montana. The most prominent benefit is that you will incur lower sales taxes. You can register your car with the help of an agency, making the registration process more pleasant for you.
Chapter 3 of Title 61 in the Montana Code Annotated mentions the regulations for registering your vehicle. In this article, we will take a look at the registration process for your new car and define the steps you need to take to avoid sales tax on an RV.
Benefits Of Registering In Montana
Before getting into the process, let’s discuss why you should register your vehicle in Montana.
The primary reason is that you do not have to pay any sales tax when you purchase an RV. Montana does not charge sales tax on vehicle purchases. In most states, you typically have to pay 3% to 10% sales tax for your recreational vehicle.
An average 24’ RV in decent shape will cost around $40,000. However, the price can go as high as $100,000 if you’re looking to buy from well-known brands.
Hence, your spending will increase by $4,000 to $10,000 to accommodate the hefty sales tax imposed by other states. However, you would ideally want to avoid further expenses when you are already about to make a big purchase.
Registering your RV in Montana is a perfectly legal solution to this problem, which exempts you from paying additional sales tax. While some people think registering your vehicle like this would be poorly seen in the eye of the law, it is a common and legally accepted practice.
Another benefit of registering in Montana is that you can receive a permanent license plate for your RV. As a result, you won’t have to worry about annual registration costs. You will just need to submit the required paperwork once, and it will be valid until the end of your RV’s lifetime.
Registering Your Recreational Vehicle
A Montana LLC is the most practical way to register your RV. The LLC will need to be formed as a resident of Montana. So while you do not need to be a Montana resident, the LLC must be based there.
As a resident, the LLC you form will have all the rights of a regular Montana resident. Since you will register your RV through the LLC, it will become a company asset. So your recreational vehicle will be under the direct ownership of your LLC, and you, as the owner of that LLC, would have complete authority over it.
Now let’s start talking about getting your LLC ready. First, you need to select a unique business name. No two companies in Montana can have the same name. So please search the Montana Business Database to ensure your business name is unique.
The next step is to find an agency. Many agencies in Montana offer similar services at different prices. The agency will help you form your Montana-based LLC. Moreover, they will help maintain the legal specificities of your LLC and act as the agent for your paperwork.
All Day $49 Montana Registered Agent is one such agency that offers reliable services at an affordable cost. Once you select an agency, you must upload the required files and paperwork through the Montana Secretary of State web portal to finalize your LLC application.
You will have to submit all of the mentioned paperwork:
- The name of your LLC (remember that this needs to be unique)
- Duration of your LLC / how long you want it to exist
- Mailing address
- Registered agent information
- Member information
- Defining the management structure of your LLC
- Signature and title of the person completing the paperwork
You can mention in the paperwork whether you are the sole owner of the LLC. Doing so would clarify that you have the complete legal authority of your RV.
After submitting the paperwork, you can expect to have your Montana LLC officially registered within the next 7-10 business days. However, some agencies offer expedited processing options that complete the LLC registration in one day. You can then decide which RV you wish to purchase through your LLC or register a trailer you already own.
Once you make your RV purchase, you will have to deal with the vehicle registration paperwork. You will need to send some necessary documents to Montana’s DMV (Department of Motor Vehicle) to receive your license plates, registration papers, and title documents.
But fret not, because your agency will take care of all this. You just have to send them the paperwork so they can handle the rest.
Is It Legal?
Yes, it is. Registering your vehicle with an LLC is commonly accepted in Montana. There do not seem to be any future legal implications for choosing to establish an LLC to own a recreational vehicle.
Final Words
Buying a recreational vehicle is not a decision you make overnight. There are significant costs involved, and it is completely natural to look at options that help make your buying experience cost-efficient.
The State of Montana offers unique benefits for you when you decide to register your travel trailer. The sales tax exemption is a boon to all interested and prospective recreational vehicle owners. In addition to saving thousands of dollars in sales tax, you can receive the services in a simple, transparent manner if you choose to enjoy the services of an agency.
If you’re a resident of Montana, you have access to a host of benefits as you register your RV. Although you can complete all the paperwork yourself, we strongly recommend getting counsel and support from an agency, as they have experienced professionals familiar with the registration process.
You will save countless hours of your time as you hire an agency and also be able to save up on money as you legally avoid sales tax.
