taxes?

rasbury

Howdy- I was at the ramp while someone was looking over our boat and made the comment that because the boat has a galley, it can somehow be claimed as a "second" home and the interest on the loan can be a tax deduction on federal taxes? Any loop holes on these boats I need to be aware of?

Mike_G

Funny.. I was just trying to figure out the same thing a couple of days ago.

I purchased a new boat this year.  From what I understand, you can write off not only any interest paid on the loan, but also the sales tax.  You can also write off any money that you paid to reduce points on the loan if you did so. (EDIT: Other than the loan interest, it will vary by personal situation as to what else you can deduct.  Links below explain)

There are some other things that you could claim as well, but you have list your boat as a "charter" boat, and then document that more than a certain percentage is used for chartering as well as some other stuff (keeping meticulous records).  Not worth it.  I will just be doing the sales tax and interest paid.

Oh.. and it also has to have a "berth", so do not believe that a large open-bow with a galley and a head would count, unless it is something like the Chaparral 327SSX (ie. an open bow with a cabin).  Man.. I would REALLY like one of those!-=Mike G.

EDIT: Here are some links (that I added to another post as well) for more info.  You have to pay attention to the details.  The boat loan interest deduction is the "easiest" one to do correctly.

http://www.boatus.com/pressroom/release.asp?id=760#.VHdFWLstBiM

http://blogs.hrblock.com/2013/07/31/boats-and-taxes-everything-you-need-to-know-while-you-stay-afloat/

http://www.discoverboating.com/resources/article.aspx?id=65

-=Mike G.

luckydog

I had no idea you can use it as a tax deduction

Mike_G

rasbury said:

claimed as a 2nd home? repair expenses? Now I know how the 1% make it!

The "repair expenses" is only if you use your boat as part of a business like a charter, or for "company outings" and/or to wine and dine potential clients.  There's all sorts of other details you have to keep, like what "potential" customers/business you are trying to get, who it was, etc.  P.I.T.A.  -=Mike G.

Mike_G

LOL!!  I need to wine and dine some new "recruits" (no admiral for me).. does that count? lol

As for staying on the boat... 2 weeks?  No prob.  -=Mike G.

JC290

All kinds of write offs on a boat been doing it for years

Black_Diamond

My parents bought a really nice Hunter sailboat years ago, way below market price, the reason: the original owner was playing the 'charter' game with it and got caught red-handed by the IRS and needed to sell fast for the cash.  Once you try to use your boat as a business, you need records, a 6-pack license at a minimum, and remember taking depreciation also figures in when you sell.  As noted, it can be a real PITA and probably not worth it...if you are not doing it as a business 'for real'.  These things are IRS red flags.

You can deduct interest on the loan if you can cook, sleep and have a 'bathroom' on board, I'm not sure about points. 

JC290

Any good tax person can explain what you can write off for a boat with out having issues. There are more then you think. 

JoeStang

Yep, we got back about $300 last year because of the deduction for the interest on the loan. I figured uncle sam bought me a tank of gas! LOL

LaRea

If anybody has thoughts of writing off boating expenses other than loan interest, I would suggest you learn to like cigarette smoke.  I hear most people in federal prisons are smokers. ;-D

Mike_G

LaRea said:

If anybody has thoughts of writing off boating expenses other than loan interest, I would suggest you learn to like cigarette smoke.  I hear most people in federal prisons are smokers. ;-D

Agree.

It gets pretty complicated for anything other than the loan interest.  For example; Taxpayers who itemize their deductions have the option of claiming either state and local income taxes or state and local general sales taxes. If you elect to deduct sales taxes – say, if your state doesn’t have an income tax (I’m looking at you, Florida and Texas) – you should save sales receipts and deduct the actual sales taxes paid. If you lose track of your receipts, use the sales tax tables provided by the IRS. Here’s where your boat comes in: using either method, you can also include the sales taxes you paid on your vessel, only up to the amount that would have been imposed at the general sales tax rate.

Here are some links for those that REALLY want to know, but the simplest thing to do (and what I am doing) is to just claim the loan interest as I do spend more than 2 weeks on the boat per year.

http://www.boatus.com/pressroom/release.asp?id=760#.VHdFWLstBiM

http://blogs.hrblock.com/2013/07/31/boats-and-taxes-everything-you-need-to-know-while-you-stay-afloat/

http://www.discoverboating.com/resources/article.aspx?id=65

-=Mike G.

MarkB

Note to claim your boat as a charter, you need to be licensed, have insurance and take courses. Not an easy thing to do, or cheap to do either.

I'm assuming everyone is talking about write offs in the USA.  I don't think we can write off anything in Canada, unless you are a charter or can prove business entertainment. Interest can't be written off, as far as I know.

Mike_G

 I'm sorry.. yes, I am talking about in the USA.  I forgot about our Canadian family.  

There was talk from our government a few years ago about repealing the loan interest deduction.  That's because apparently to some people, if you can afford a boat then you must be "rich".  Working hard and being successful must not be rewarded, instead you must donate more $$$ to "less fortunate".  (I'm trying not to get to political here, but I will admit I was annoyed)  -=Mike G.

Black_Diamond

writing off business entertainment expenses on your personal taxes is a risky business, especially trying to claim gasoline...and a lot of it.  Think your employer would reimburse you for that same expense if you tried?  lol  

Remember, in the USA: a tax deduction is basically a subsidy.  Your interest deduction (which is only the % of the tax bracket you are in) pales to the depreciation (RY should like that one!).  

Black_Diamond

Not a hater!  

Mike_G

 RinkerYan said:

Oh B_D why are you a hater?

  lol!

Handymans342

When we move to Florida my wife can school you guys on tax prep and do your taxes too!

raybo3

A galley and a head. Yes it can be claimed on your taxes....

rasbury

claimed as a 2nd home? repair expenses? Now I know how the 1% make it!

rasbury

well, at least the interest anyway...and I think you have to claim that you spend at least two weeks a year on the boat..interesting!

rasbury

I'm in fleet sales for a Ford dealership....need to do some wining and dining it sounds to me like!

rasbury

I'm guessing the IRS might frown on that deduction but I support you 100%!