Motorhome principal residence

[R. Butler]

Participant is requesting a hardship distribution for purchase of an RV that will be used as participant's principal residence.  Plan document allows for hardship distributions for safe harbor purposes.  I see no issue with allowing the hardship distribution.  Recordkeeper is asserting that the IRS requires that a principal residence be a "fixed" dwelling and that they have unequivocally indicated that a motorhome is not considered a principal residence.  The recordkeeper offers no documentation just their assertion.

Has the IRS indicated that an RV cannot serve as a principal residence? 

 

Thank you for any guidance.         

[MoJo]

I've not heard of any requirement that the dwelling be fixed.  For years, we've allowed hardships for the purchase of a boat as the principle residence.  It must have a roof, a bedroom, and a bathroom.  Also, wouldn't probably fly on the shores of Lake Superior, but other place - sure.  Certainly not fixed...

I can only imagine that with remote work, work from anywhere, and with pretty good portable internet, this is going to become more popular (apart from fuel costs).

My boss has one, and she has been known to work on the road.....

[Peter Gulia]

When a recordkeeper's customer-service person does not cite an authority, my experience suggests there is none.

And even if there might be some Internal Revenue Service notice or announcement (or even a Revenue Ruling), only the Treasury department's rule binds a taxpayer. 

 

[david rigby]

Not the first time for this question:

 

[Nate S]

How else to you prove your primary residence, utilities, mailing address, voter registration, driver's license(!!), etc.  Might be after-the-fact if they're downsizing, but its all the same otherwise.  Snowbirds aren't all condo owners in the off-season, plenty of them just move their "home" from campground to campground. 

[CuseFan]

I don't care about pollution I'm an air-conditioned gypsy, that's my solution, watch the police and the tax man miss me - I'm mobile! 

 

[Bri]

Who sang that.

(not a question)

[AMDG]

It's a facts and circumstances question for the participant - if the RV is their principal residence, then so be it.  Although RVs are not mentioned specifically, this excerpt from IRS Pub 523 (Publication 523 (2021), Selling Your Home | Internal Revenue Service (irs.gov)) may be helpful:

Sale of your main home.

 You may take the exclusion, whether maximum or partial, only on the sale of a home that is your principal residence, meaning your main home. An individual has only one main home at a time. If you own and live in just one home, then that property is your main home. If you own or live in more than one home, then you must apply a "facts and circumstances" test to determine which property is your main home. While the most important factor is where you spend the most time, other factors are relevant as well. They are listed below. The more of these factors that are true of a home, the more likely that it is your main home.

• The address listed on your:

  1. U.S. Postal Service address,

  2. Voter Registration Card,

  3. Federal and state tax returns, and

  4. Driver's license or car registration.

• The home is near:

  1. Where you work,

  2. Where you bank,

  3. The residence of one or more family members, and

  4. Recreational clubs or religious organizations of which you are a member.

Finally, the exclusion can apply to many different types of housing facilities. A single-family home, a condominium, a cooperative apartment, a mobile home, and a houseboat each may be a main home and therefore qualify for the exclusion.

[Nate S]

Anyone remember your SAT's: Houseboat is to Rivers as RV is to Roads; or Propeller is to Water as Wheel is to Road; or Steering Wheel is to Rudder as Power Steering is to Live Independent Suspension

[ERISA guy]

The recordkeeper may be referring to this: 

(1) In general. Whether property is used by the taxpayer as the taxpayer's residence depends upon all the facts and circumstances. A property used by the taxpayer as the taxpayer's residence may include a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation (as those terms are defined in section 216(b)(1) and (2)). Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.

Treas. Reg. § 1.121-1(b)(1). 

[MoJo]

3 minutes ago, ERISA guy said:

The recordkeeper may be referring to this: 

Property used by the taxpayer as the taxpayer's residence does not include personal property that is not a fixture under local law.

Treas. Reg. § 1.121-1(b)(1). 

That tells me that the furniture in the mobile home is not considered part of the residence for IRS purposes, and presumably the cost of such )non-fixture) furnishings would not be part of the calculation of the hardship amount.....

[ERISA guy]

It appears to actually be speaking to the "residence" itself. 

Taxpayer's trailer, placed on a lot in a trailer park, didn't qualify as a residence because it wasn't a fixture under the then applicable state (CA) law. Although it was connected to utility services provided by the park, it wasn't permanently attached to the land, i.e., there was no permanent or temporary foundation on which it rested. The trailer's wheels remained in place and supported it. To be a residence, it had to be somehow attached to, or embedded in, the soil (“affixed to the land”). TC Summary Opinion 2014-80.

[Peter Gulia]

Perhaps another reason for a plan's administrator or its service provider to design a claim form that recites, with text following the tax law rule, the allowable reasons, and calls the claimant to certify she meets one.