ANOTHER taxing question for Charter Boats

[Andy1237]

Charter boat owners-who gets the depreciation on your boat? Some of you own boats in a charter fleet and I'm wondering how it works for you and your accountant.

Do you get net rental proceeds? or do you get gross rents and deduct taxes, interest, and take the depreciation?

 

[Ross]

All of your expenses are deductable including depreciation, mortgage interest, charter agent fees, from the income from the boat and from your other investment and earned income. Your accountant will set up the details of ownership and liability but will prepare a combined income tax return.

 

[Jim Kolstoe]

Ross, I think you're right so far as that goes, but to the extent that you take depreciation, you reduce you basis in the asset, so that when you turn around and sell it later, you may realize taxable gain on the transaction. Any accountants out there want to weigh in on this?
Jim Kolstoe, h23 Kara's Boo

 

[Ross]

Jim , you are absolutely correct on that count. One of the tax avoidance methods is to use the depreciated property for colateral for a loan to purchase more property and keep both properties in rental service.