$8,000 Tax Credit

[thesnort]

Does the homebuyers' tax credit (U.S.), due to expire soon, apply to a boat one buys to live aboard?
Google hasn't convinced me yet. Does anyone know?

[Mimsy]

I would talk to a CPA. Its a big enough amount to be worth seeing if it qualifies as a legal dedecution and also a big enough amount to tick off the IRS if you aren't really entitled.

[denverd0n]

For purposes of the home mortgage deduction a properly-equipped sailboat or RV can qualify as a "home," so it seems logical that the same would apply in this case. My guess is that you won't get an absolutely definitive answer on this, however, until someone tries it and either the IRS accepts it or it goes to trial.

Remember, however, that the credit is actually more like an interest-free loan--you have to pay it back over the course of 15 years. Also, it cannot be used for a second home, a rental property, or anything other than your primary residence. Finally, to qualify, you have to meet certain income limits and you cannot have had any ownership interest in any home within the last three years.

[winddancer88]

Originally Posted by denverd0n

For purposes of the home mortgage deduction a properly-equipped sailboat or RV can qualify as a "home," so it seems logical that the same would apply in this case. My guess is that you won't get an absolutely definitive answer on this, however, until someone tries it and either the IRS accepts it or it goes to trial.

Remember, however, that the credit is actually more like an interest-free loan--you have to pay it back over the course of 15 years. Also, it cannot be used for a second home, a rental property, or anything other than your primary residence. Finally, to qualify, you have to meet certain income limits and you cannot have had any ownership interest in any home within the last three years.

For principal residences purchased between January 1 and December 1, 2009 you no longer have to pay back the credit, provided you live in the home for at least 3 years.

[winddancer88]

Originally Posted by thesnort

Does the homebuyers' tax credit (U.S.), due to expire soon, apply to a boat one buys to live aboard?
Google hasn't convinced me yet. Does anyone know?

This is the closest I've come to a definitive answer. The IRS instructions for Form 5405 read as follows:

"Your main home is the one you live in most
of the time. It can be a house, houseboat, housetrailer,
cooperative apartment, condominium, or other type of
residence."

I think a liveaboard can be construed as a "houseboat".

[winddancer88]

And don't forget, this is still a "First-Time" homebuyer's credit. If you've owned a home within the last three years, no credit for you. Note that there has been talk in congress about extending this credit to all homebuyers.

[thesnort]

Thanks for your replies! Winddancer, thanks for doing the research on this. You're a better man (woman?) than I.
I posted the same question on another forum and the replies support what you say: $8,000 Tax Credit - Cruisers & Sailing Forums

[winddancer88]

I've found some more information on this and it seems that IRS is taking a different position for the First Time Homebuyer's Credit than I expected (remember, they don't write the laws, they just interpret them). According to the IRS, a boat or rv can be your personal residence for purposes of deducting mortgage interest, but not for claiming the First Time Homebuyer's Credit. Some Q&A posted to the IRS web site:

"Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.

Q. Can a taxpayer who purchases a travel trailer qualify for the credit?

A. A travel trailer that is affixed to land may qualify as a principal residence.

Q. Can an individual who has lived in an RV qualify for the credit?

A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer."

I'm not sure if this would hold up in court, but I would not recommend fighting them on this one.

[bexaminer]

The other thing to remember is that the income tax credit is not necessairily an automatic $8,000. It's actually 10% of the purchase price up to $8,000.

[nailbunnySPU]

Got it! Hooray!