Does anyone out there claim their boat loan interest on their taxes as a second home? A tax advisor told the wife it is not.
Boat loan interest: Tax deductible?
- Thread starter Broke sailor SV Marcell
- Start date
- Status
Yes. I deduct it.
As stated, if the boat has a galley and a holding tank, then it qualifies. Same rules for a vacation home or large RV. TurboTax has provisions for it. That was reason #2 I traded up to a larger boat. We have very few tax deductions and end up paying more that the average for our income bracket.
As stated, if the boat has a galley and a holding tank, then it qualifies. Same rules for a vacation home or large RV. TurboTax has provisions for it. That was reason #2 I traded up to a larger boat. We have very few tax deductions and end up paying more that the average for our income bracket.
We have no deductions.
And to pay interest to get a deduction is cutting off your nose to spite your face. The only thing that's deductible is the amount of tax on your interest expense. Horrible financial practice. We paid off the mortgage 2 years ago. Quarter million bucks in 9 years. Bankers be damned! We're FREE!
And to pay interest to get a deduction is cutting off your nose to spite your face. The only thing that's deductible is the amount of tax on your interest expense. Horrible financial practice. We paid off the mortgage 2 years ago. Quarter million bucks in 9 years. Bankers be damned! We're FREE!
Cheap Loan
Fred, At the time my savings were earning less then 3% and a new boat loan was less then 6%. We took a ten year loan and are paying double against the principle. AND the finances were only the #2 reason for a new boat.
Fred, At the time my savings were earning less then 3% and a new boat loan was less then 6%. We took a ten year loan and are paying double against the principle. AND the finances were only the #2 reason for a new boat.
Yep
Mike stated the criteria for qualifying as a second home. I'd be looking for a different tax advisor. It was in last year's instructions for the 1040 itemization process. Fred's right but those of us that have to carry a mortgage appreciate the break.
Mike stated the criteria for qualifying as a second home. I'd be looking for a different tax advisor. It was in last year's instructions for the 1040 itemization process. Fred's right but those of us that have to carry a mortgage appreciate the break.
Interest Write-off
Dear Broke Sailor, We have been doing it for years as we upgraded to our current Hunter 420. You have to spend at least 30 days on the boat, and it has to have provisions to Eat (Galley), Sleep (Berths), and have a Bathroon (Head). Have fun, Captain Chuck
Dear Broke Sailor, We have been doing it for years as we upgraded to our current Hunter 420. You have to spend at least 30 days on the boat, and it has to have provisions to Eat (Galley), Sleep (Berths), and have a Bathroon (Head). Have fun, Captain Chuck
Can't write off nothing
We can't write off interest or nothing for first or second home in Canada. Buy a house or boat you are on your own. Uncle Beaver don't let you clain nothing.
We can't write off interest or nothing for first or second home in Canada. Buy a house or boat you are on your own. Uncle Beaver don't let you clain nothing.
Do your homework
The availability of deductions and credits on income taxes seems to diminish each year. Put a pencil to the allowable deduction based on your tax liability and if you save do it. Hope second home interest is always deductable! Our sailboat is our second home. We spent over seventy days on board last year. Many people do not take deductions because they are small? Take advantage of all deductions you can. Not only do they save you income tax but most are designed for good reason to stimulate the economy. I do not think paying interest is always a horrible thing. Paying interest that is not deductable or extremely high is a horrible thing.
The availability of deductions and credits on income taxes seems to diminish each year. Put a pencil to the allowable deduction based on your tax liability and if you save do it. Hope second home interest is always deductable! Our sailboat is our second home. We spent over seventy days on board last year. Many people do not take deductions because they are small? Take advantage of all deductions you can. Not only do they save you income tax but most are designed for good reason to stimulate the economy. I do not think paying interest is always a horrible thing. Paying interest that is not deductable or extremely high is a horrible thing.
Taxes
This is probably just stating the obvious, but the boat has to actually be mortgaged for the interest to be deductible. Interest from signature loans etc that are not secured by the boat is not deductible (even if the money was used to buy the boat). Also total mortgage and home equity lines can not equal more than $1,100,000 (home equity line is limited to $100,000). The interest on the amount over 1.1 million is not tax deductible. Scott This is not tax advice...
This is probably just stating the obvious, but the boat has to actually be mortgaged for the interest to be deductible. Interest from signature loans etc that are not secured by the boat is not deductible (even if the money was used to buy the boat). Also total mortgage and home equity lines can not equal more than $1,100,000 (home equity line is limited to $100,000). The interest on the amount over 1.1 million is not tax deductible. Scott This is not tax advice...
Ask the IRS
Quoted (Cut & paste) directly from From IRS Publication 936: "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." You might ask: What do they consider a "Second Home"? Here's the answer from the same publication: "Second home. A second home is a home that you choose to treat as your second home." It goes on to say: "Second home not rented out. If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You do not have to use the home during the year." Ain't the internet grand?
Quoted (Cut & paste) directly from From IRS Publication 936: "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." You might ask: What do they consider a "Second Home"? Here's the answer from the same publication: "Second home. A second home is a home that you choose to treat as your second home." It goes on to say: "Second home not rented out. If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You do not have to use the home during the year." Ain't the internet grand?
Ya know,
The talking heads on TV speak of home mortgages and credit as if they are a given. Everyone has to have it. No other way to live. BS. It's cultural. In this country, when a kid comes-of-age, they better find their own place to live, period. That means starting from scratch and that means borrowing money. Back in my place of birth, Italy,(I was a U.S. Army baby boomer) people live at home with their family, marry, the spouse moves in and the MAN saves his money for about five years and buys a house. Then they move out. No mortgage and no debt. If we did the same in the U.S. there wouldn't be a Mortgage Broker business on every block and we would be free to enjoy more of life. Do this; Those of us with a mortgage, multiply your P&I X 72. The amount for six years comes real close to the total cost of your home, doesn't it!
The talking heads on TV speak of home mortgages and credit as if they are a given. Everyone has to have it. No other way to live. BS. It's cultural. In this country, when a kid comes-of-age, they better find their own place to live, period. That means starting from scratch and that means borrowing money. Back in my place of birth, Italy,(I was a U.S. Army baby boomer) people live at home with their family, marry, the spouse moves in and the MAN saves his money for about five years and buys a house. Then they move out. No mortgage and no debt. If we did the same in the U.S. there wouldn't be a Mortgage Broker business on every block and we would be free to enjoy more of life. Do this; Those of us with a mortgage, multiply your P&I X 72. The amount for six years comes real close to the total cost of your home, doesn't it!
No, Fred
It doesn't even come close. Great Theory about saving enough and living with Mom and Dad. Certainly not practical in my case. Probably not in most.
It doesn't even come close. Great Theory about saving enough and living with Mom and Dad. Certainly not practical in my case. Probably not in most.
(Somewhat) Professional Advice
Copied from FAQs re: "Vacation Homes" from the IRS website: "You are considered to use a dwelling as a home if you use it for personal purposes during the tax year for more than the greater of 14 days or 10% of the total days it is rented to others at a fair rental price." "There is a special rule if you use a dwelling as a home and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses. If you itemize your deduction on Form 1040, Schedule A (PDF) Itemized Deductions, you may be able to deduct mortgage interest, property taxes..." So, if you rent your "second home" (i.e. boat) out for < 15 days, and use it yourself for more than 14 days (and it meets the "secured by", eating, sleeping and sanitation requirements previously described), you are likely OK deducting the interest. And, to satisfy the newly enacted restrictions under IRS Circular 230 imposed on us tax advisors from doing what we are paid to do by you all: "You are hereby informed that any advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This advice may not be forwarded without our express written consent." (If I'm restating what IRS has already told us all online, do I really have to "Cover my A**" with this kind of statement? The rules say YES I do!!!) I'm getting too old for this stuff. And I need to charge more for what I do... So I'll send you all a bill. Phil, can you e-mail me everybody's address? Invoices are overdue after 30 days.... ;D Peter Hine, CPA Stockton CA
Copied from FAQs re: "Vacation Homes" from the IRS website: "You are considered to use a dwelling as a home if you use it for personal purposes during the tax year for more than the greater of 14 days or 10% of the total days it is rented to others at a fair rental price." "There is a special rule if you use a dwelling as a home and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses. If you itemize your deduction on Form 1040, Schedule A (PDF) Itemized Deductions, you may be able to deduct mortgage interest, property taxes..." So, if you rent your "second home" (i.e. boat) out for < 15 days, and use it yourself for more than 14 days (and it meets the "secured by", eating, sleeping and sanitation requirements previously described), you are likely OK deducting the interest. And, to satisfy the newly enacted restrictions under IRS Circular 230 imposed on us tax advisors from doing what we are paid to do by you all: "You are hereby informed that any advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This advice may not be forwarded without our express written consent." (If I'm restating what IRS has already told us all online, do I really have to "Cover my A**" with this kind of statement? The rules say YES I do!!!) I'm getting too old for this stuff. And I need to charge more for what I do... So I'll send you all a bill. Phil, can you e-mail me everybody's address?
Invoices are overdue after 30 days.... ;D Peter Hine, CPA Stockton CA
Isn't Congress grand???
You can deduct mortgage interest on two homes, but not on a car you buy to get to work and back home. Most of our elected friends in Congress own two homes (one at home, and one in DC). They know how to take care of their selves.
You can deduct mortgage interest on two homes, but not on a car you buy to get to work and back home. Most of our elected friends in Congress own two homes (one at home, and one in DC). They know how to take care of their selves.
Yes it is..
Yes interest on a boat is deductible as long as it has a head, galley and place to sleep. Fred, Unfortunately your math is quite fuzzy by todays standards. My P&I is around 1k, actually slightly less, but for round numbers 1k works. If I saved for 72 months, living at home, I would not even have enough for a 20% down payment in our neighborhood...... Hell 72k won't even buy you a single wide within comfortable commuting distance to the "big city" these days.... I paid for my house the hard way "sweat equity" we bought and sold 5 houses fixing each one up and tweaking the curb appeal along the way. For example our first house cost us 90k we spent 7k in materials and sold it 14 months later for 148k with out a realtor. If we had leached of our parents for six years where would we be today??? Our hard work and late nights, re-wiring, gutting and remodeling eventually allowed us to put enough down on this house, which is just feet from the water and has deeded mooring rights, to have a very reasonable mortgage payment. Six years of freeloading & 72k would not have allowed us to afford this house or live the sailing lifestyle we currently do only hard work and some smart decisions could do that...
Yes interest on a boat is deductible as long as it has a head, galley and place to sleep. Fred, Unfortunately your math is quite fuzzy by todays standards. My P&I is around 1k, actually slightly less, but for round numbers 1k works. If I saved for 72 months, living at home, I would not even have enough for a 20% down payment in our neighborhood...... Hell 72k won't even buy you a single wide within comfortable commuting distance to the "big city" these days.... I paid for my house the hard way "sweat equity" we bought and sold 5 houses fixing each one up and tweaking the curb appeal along the way. For example our first house cost us 90k we spent 7k in materials and sold it 14 months later for 148k with out a realtor. If we had leached of our parents for six years where would we be today??? Our hard work and late nights, re-wiring, gutting and remodeling eventually allowed us to put enough down on this house, which is just feet from the water and has deeded mooring rights, to have a very reasonable mortgage payment. Six years of freeloading & 72k would not have allowed us to afford this house or live the sailing lifestyle we currently do only hard work and some smart decisions could do that...
I Did when my boat was finamced...
...as long as it was the ONLY second home claimed and you sleep on it, cook on it and it has a head on it for 20 days per year.
...as long as it was the ONLY second home claimed and you sleep on it, cook on it and it has a head on it for 20 days per year.
where did "20 days" come from?
have seen this in 2 comments - can someone point out where the "20 day" reference is? To elaborate on what Fred said, $900 billion (yes, billion) in credit crd debt exists in the U.S. which obviouly excluded mortgage debt. If that doesn't prove Fred's point, I must be missing something.
have seen this in 2 comments - can someone point out where the "20 day" reference is? To elaborate on what Fred said, $900 billion (yes, billion) in credit crd debt exists in the U.S. which obviouly excluded mortgage debt. If that doesn't prove Fred's point, I must be missing something.
Thanks Don!
And you guys are right about my fuzzy math. The loan amount for P&I purposes should be based on a 15 year loan.(Fully amortized, start to finish) My credit union WILL NOT issue a longer loan. OK, that said, you guys are using fuzzy math too. What year was that $35K house first bought (for that price)? What was the P&I at that time on THAT mortgage? Also don't be throwing out comparisons with bizarre 'designer loans' like ARM's. Those are worse than credit cards. I don't care what the house is worth today. Nor is it relevant what housing costs are in your neighborhood. Inflation is controlled and propagated by the Fed. Too bad the Feds didn't keep control of mortgages. And see what I mean about our culture forcing us into debt. Maine Sail called living at home "FREELOADING". I call it FAMILY. Sorry, I can't let this go: Maine Sail, you're comparing sweat equity from several homes, all applied to your present location. Of course that's gonna reduce your mortgage! Your example is irrelevant. It means that you used a different work method to accomplish the desired results. You could have just as easily worked two or more paid jobs and not worked for sweat. You do sound VERY proud. Is that your point?
And you guys are right about my fuzzy math. The loan amount for P&I purposes should be based on a 15 year loan.(Fully amortized, start to finish) My credit union WILL NOT issue a longer loan. OK, that said, you guys are using fuzzy math too. What year was that $35K house first bought (for that price)? What was the P&I at that time on THAT mortgage? Also don't be throwing out comparisons with bizarre 'designer loans' like ARM's. Those are worse than credit cards. I don't care what the house is worth today. Nor is it relevant what housing costs are in your neighborhood. Inflation is controlled and propagated by the Fed. Too bad the Feds didn't keep control of mortgages. And see what I mean about our culture forcing us into debt. Maine Sail called living at home "FREELOADING". I call it FAMILY. Sorry, I can't let this go: Maine Sail, you're comparing sweat equity from several homes, all applied to your present location. Of course that's gonna reduce your mortgage! Your example is irrelevant. It means that you used a different work method to accomplish the desired results. You could have just as easily worked two or more paid jobs and not worked for sweat. You do sound VERY proud. Is that your point?
- Status