Second Home?

[kloudie1]

I too deducted boat loan interest with no problems. As previous posters have stated, as long as it meets the requirements of sleeping, cooking and bathroom facilities, it qualifies.. I will add.. If you claim the boat as part of a charter business, do not claim it as a second home.. This assumes you file long form with itemized deductions ..

 

[Randy Rohrbeck]

Therein lies the issue. You need an address of the second home, not a marina address, a mooring or a driveway trailer. Minimizing taxes is fine. Avoiding taxes isn't.

Don - Your statement about needing an address is just wrong.

If you qualify for the deduction go ahead and take it. That in itself won't raise any red flags.

And I am an accountant.

 

[Don S/V ILLusion]

Don - Your statement about needing an address is just wrong.

If you qualify for the deduction go ahead and take it. That in itself won't raise any red flags.

And I am an accountant.

My accountant disagrees with that so where does that leave us? Opinions among accountants vary.

 

[JK_Boston_Catalina310]

My accountant disagrees with that so where does that leave us? Opinions among accountants vary.

Nope Don, you need a new accountant.

Boat US article about claiming the interest.

From the IRS:

Qualified Home

For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.

All of that lost interest deduction. That sucks. I hate when professionals give bad advice.

 

[Richard19068]

Therein lies the issue. You need an address of the second home, not a marina address, a mooring or a driveway trailer. Minimizing taxes is fine. Avoiding taxes isn't.

Avoiding taxes is perfectly legal, as a matter of fact it is almost a duty. Evading taxes is not legal.

For the second residence interest deduction you don't need to say it is for a boat, you don't need the address of the boat, you don't need to use it as a second home . As long as it qualifies as a second home you are good. If you get a 1098 from the lender you just put the interest on the home mortgage interest line 10 on schedule A along with the interest on your primary home. If you don't get a 1098 from the lender you put the interest on line 11. If you don't get a 1098 and the lender is the person or entity you bought the boat from you also list the lender's name, ID number and address on line 11. The loan does have to be secured by the boat. If you use a home equity line or second on your primary residence to buy the boat it doesn't count as second residence interest (although it could count as home equity debt up to the $100,000 limit for that).

But, as was said earlier, if you don't have enough deductions to itemize it doesn't do you any good.

 

[Ron20324]

Don - Your statement about needing an address is just wrong. If you qualify for the deduction go ahead and take it. That in itself won't raise any red flags. And I am an accountant.

I agree with Randy. It's not a matter of opinion, guys, it's all printed in the government tax laws. Read'em and weep, but give up the peeing contest, guys.

 

[Johnb]

Any words of advice for me - next year I am going to be retired, living on our boat, while waiting about a year to start taking social security and disbursements from retirement plans and basically living on savings and income from our house rental. Earned income will probably be about $15,000 - all from house rental.

Neither boat nor home has a mortgage but there will be dock fees of about $550 a month

 

[woodster]

i think for every 3 dollars you rec income you will have to send one dollar back to the ss if you income is over 14,200 the first year so you may need to send back 23.00 a month till that increase in allowable income the next year ...someone correct me if i am incorrect ...and also John don't answer the phone lol

 

[Stu Jackson]

Any words of advice for me - next year I am going to be retired, living on our boat, while waiting about a year to start taking social security and disbursements from retirement plans and basically living on savings and income from our house rental. Earned income will probably be about $15,000 - all from house rental.

Neither boat nor home has a mortgage but there will be dock fees of about $550 a month

John, no idea what kind of advice you're looking for. I've reread your post four times...

Can you be more specific? Are you looking to deduct dock fees? Smity mentioned tax laws in Massachusetts, don't know if there's anything like that here in California. In addition, you may have too little income to itemize deductions anyway.

Am I getting closer?

 

[Johnb]

John, no idea what kind of advice you're looking for. I've reread your post four times...

Can you be more specific? Are you looking to deduct dock fees? Smity mentioned tax laws in Massachusetts, don't know if there's anything like that here in California. In addition, you may have too little income to itemize deductions anyway.

Am I getting closer?

I was just wondering if there was somebody out there who has been there/done that and had some words of wisdom to share. I am going to guess that with an income about at the poverty line for that year we are not going to pay much in taxes anyway.

 

[Stu Jackson]

John, again, "wisdom" about what, specifically? Using the boat as a second home deduction has been clarified. Are you talking about slip rent? Help us to help you, please.

 

[Scott T-Bird]

Odds for audit

I would deduct the interest as a 2nd home. Do you think you might ever be in the cross-hairs for an audit? It doesn't sound like you are among that big-fish category. I certainly am not and the calculated odds for being audited (according to TurboTax ) is miniscule in my tax circumstance.

BTW, I use a home equity line of credit for financing, if necessary. Interest rates are extremely low, re-payment is very flexible and all of the interest is tax deductible no questions raised at all. I can't see any reason to look for a boat loan when this option is so much easier.

 

[justsomeguy]

Besides the hassle of time an audit takes, don't be afraid of them.

All they want is money.

 

[Don Lucas]

yeah well, I've been deducting the interest on my boat for years, been through an audit, didn't have a formal 1099 and it was not a problem for the IRS. And no, you do not need to provide an address for the boat because, you know, by definition, it moves around

Same for me!

 

[Johnb]

John, again, "wisdom" about what, specifically? Using the boat as a second home deduction has been clarified. Are you talking about slip rent? Help us to help you, please.

I guess the thought I was having is - what if you own the home but not the land, so you have to pay for a lease on the land. Is that in any way similar to owning the boat but paying for the slip?

 

[philwsailz]

I guess the thought I was having is - what if you own the home but not the land, so you have to pay for a lease on the land. Is that in any way similar to owning the boat but paying for the slip?

Rent is rent. There is no interest paid, so no deduction

 

[justsomeguy]

Rent is rent. There is no interest paid, so no deduction

In some states in the US, that isn't true. Interest paid through rents is deductible in those states.

 

[Stu Jackson]

................Interest paid through rents is deductible in those states.

Interesting. How does that work? Just what is: "Interest paid through rents."? Sorry I don't understand the basic concept here, please help me out. Thanks.

 

[justsomeguy]

Interesting. How does that work? Just what is: "Interest paid through rents."? Sorry I don't understand the basic concept here, please help me out. Thanks.

The tenant is paying the landlord rent. The landlord pays property taxes, and is allowed a tax break.

The tenant is directly affecting the landlord's ability to pay said property taxes, therefore...?

P.S.- Only a percentage of the deduction, around 20%-ish.

 

[jdhohmann]

What are the chances that this is the same in Canada. Are we allowed to deduct the interest as well