Tax Implications of Boat Ownership

teshannon · #1 (**permalink**) 12-21-2007

I'm aware that if your boat has a head and galley the interest on the boat loan may be deductable. Are there any other federal tax implications associated with owning such a boat? I apologize if this has already been discussed but I could not find it in a search.

Sapperwhite · #2 (**permalink**) 12-21-2007

I claim mine as a second home (even though there is no "first home"). If you use your boat to entertain for your business you can claim that also, but you should have fuel, food, and beverage reciepts to back that up.

teshannon · #3 (**permalink**) 12-21-2007

Sapper,
Thanks. As a second home can you depreciate it or claim expenses? Anyone ever come after you for that?

blt2ski · #4 (**permalink**) 12-21-2007

I've never heard of anyone being able to depreciate a 2nd home, unless used as a rental of some sort. You can deduct interest, licensing expenses etc. assuming you have enough expense for a Sch A?

Marty

Gryzio · #5 (**permalink**) 12-21-2007

This one of those IRS red tape, if, you know what things.

Heck, the Government makes the Tax laws and the IRS interpret them.

This link to the IRS may help (Boats are mentioned in this);
http://www.irs.gov/publications/p936/ar02.html#d0e537

If, I remember, I ask my sister tomorrow, she do taxes for people and learn all the new babble every year. Someone may give better detail before then.

tommyt · #6 (**permalink**) 12-21-2007

A second home has the same benefits a first home has as far as the IRS. Unless you are also chartering the boat and making it a business, you cannot depreciate it. It will depreciate itself, but you get no benefit from that from the IRS. Hey, be happy you can afford the boat, don't look for the government to help you much on this one. It is a luxury you know, but no longer taxed as such.

Even as a charter, you have to have other passive income to offset to get benefits from depreciation. In the charter business, it is the same as owning any other boat: Unless you have other passive income to offset with your losses(and unless you are in the BVI's you will have losses), the happiest day is the day you sell the boat (business) and then you can claim the depreciation. Big payday then!

Oh, and unless it is a business, your slip fees are not deductible as part of the second home mortgage unless you actually buy the slip. Then of course you can deduct the mortgage interest and taxes on the slip. I used to break up laughing at friends that said I was so lucky to be able to deduct my car as a business expense. Hey, I think I wrote a check for that car they think is free.