Join Date: Jul 2007
Thanked 0 Times in 0 Posts
Rep Power: 9
Capital Gains / Taxes
I was reading another thread that was discussing taxes and it got me wondering...
I know that if I take a loan on a boat, I can deduct the interest as the boat is a second home (head and galley). Does that also mean that any capital expenditures I make on the boat (equipment, sails, anything really) can be used to increase my cost basis? If that's the case, I would imagine you could generate a huge capital loss over the time you own the boat as you will sell it for less than you paid (plus any expenditures).
So if I buy a boat for $25k and spend $25k on it over the time I own it and then I sell it five years later for $15k, I will have a capital loss of $35k to offset gains on a regular home.
Am I right?