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post #21 of 26 Old 03-21-2011
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If you do use a home equity loan, please check with your tax person on the deductibility of the interest. There are limits which involve the basis of your home, etc. It is often overlooked by the IRS, but you can be liable for recapture under some circumstances. Wouldn't want you to get surprised. I agree to pay cash if you can.

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post #22 of 26 Old 03-21-2011
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If you buy with a loan secured by a boat that meets the second home test (bed, head, galley) the interest will certainly be deductible. The collateral has to be the boat, you can't borrow unsecured and just say you used to the money to buy the boat.

However, if you don't already itemize your deductions, there may not be enough interest paid on such a small loan to warrant it.


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post #23 of 26 Old 03-21-2011
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Unsecured line of Credit

Before the financial crisis (ie I don't know if they do these anymore) I was given an unsecured line of credit from Bank of America for 20k at 8% open for 10 years, although I never ended up using it and later closed it.

In my mind that would be a great way to go if you don't use a home equity loan. "In theory" most older boats will hold their value as long as they are properly maintained. As you pay the loan down you can still write yourself a check from the line for replacing things that wear out like 3k here and 3k there for sails, engine rebuilds, bottom jobs, dinghies, and other things that you'll eventually break.

I ended up paying cash for a smaller one and then saved for a while and bought the one I wanted before. Everyone's situation is different, my job wasn't secure enough for me to feel comfortable financing.

I think the credit line is a great way to go.
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post #24 of 26 Old 03-21-2011
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I don't know how old you are, but life is short. If you wait until you can afford to pay cash, you will never own a boat. Not a decent one.

Don't buy a "Fixer Upper" either. You'll be sitting on the hard while your wife watches you work on the boat, weekend after weekend. And it will cost you more than if you just financed the nice boat. And you might loose the wife.

So finance a nice boat and go sailing with your peeps. You won't regret it.
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post #25 of 26 Old 03-22-2011
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Quote:
Originally Posted by lans0012 View Post
I think the credit line is a great way to go.
If this were available, remember that the interest is not going to be deductible and the rates are going to be much higher than a secured loan.

Ironically, since you personally guarantee an unsecured line, the bank has to sue you to collect, rather than foreclose or repossess collateral. When they are awarded a judgment, the collection of that judgment can be filed as a lien against your house in all states that I am familiar with. Very ironic for an unsecured loan, isn't it.

If the bank takes the collateral (boat), they can still pursue a judgment for any shortfall, but are then required to dispose of the collateral at fair value to determine the shortfall. That is hard for them to prove, since most banks prefer fast recovery to full recovery. They often ignore the shortfall as a result and just leave it open on your credit report as repossessed collateral or unpaid credit.

Just more to consider.


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post #26 of 26 Old 03-22-2011
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well, my wife, daughter,2 dogs, and 8 horses would not appreciate that very much. I would rather keep the house and lose the boat.
Are you sure you are clear on what the horses think? They'll say NAY to just about anything.
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