• Mobile App For Android Now Online!

    Download it here. The app is searchable in the Google Play Store under Sailboat Owners.

    Sorry iPhone/iPad users, we are still waiting on Apple. :(

    Click the X in the upper right corner to make this go away

Floating A Tax Deduction

Phil Herring

Dethroned Admin
Mar 25, 1997
4,721
Hunter 450 Bainbridge Island
The author Herman Wouk once said, "Income tax returns are the most imaginative fiction being written today." Of course, none of us would ever do anything like that... right? :laugh: But creativity is still legal.

What ingenious ways have you found to turn your boat into a tax deduction? Is it a second home, an office, a business, or do you claim parts and repair bills as theft?

Share your tax strategies here and help everyone's bank balance.

Treasury-United-States-Department-of-the-Treasury.png
 

RoyS

.
Jun 3, 2012
804
Hunter 33 Steamboat Wharf, Hull, MA
Asked my accountant a number of years ago if I could claim my boat marina expenses on my business tax returns. I was at that time considering using the boat in the marina as an office for my construction business. She replied, "Sure you can and you also expect a guaranteed IRS audit to follow." Never did follow through.
 
Jun 2, 2004
3,028
Hunter 23.5 Fort Walton Yacht Club, Florida
We deducted the interest when we had a loan was never an issue for us but it was not enough to make a substantial difference.

The last couple of years with the rise in the standard deduction we've not been itemizing any way.
 
  • Like
Likes: NotCook
Oct 2, 2012
4
Hunter 38 Barrington
I currently charter my boat so I may have a different situation. Even with that path, I can only claim deductions for a couple of years before the IRS declares it as a 'hobby loss' and no longer a 'viable business.' I have heard of people trying to maintain that loss for 5+ years and they were audited. My current investigation is, when I pass her to her new owner, if I can tally up all of that investment and use that to offset other long term capital gains.
 
Jul 27, 2011
4,046
Bavaria 38E Alamitos Bay
If you have employment wherein maritime skills are required, such as a crew on a fishing boat, a sailing instructor working for a school, or if you’re employed by a marine environmental research firm or similar where being on the water is often required, you MIGHT be able to deduct as personal itemized deductions some personal boat expenses as “job-related expenses.” The “job-related expense“ that might be accepted would be in the form of “maintenance of professional competence.” Your maritime skills must be maintained for the demands of the job, etc. Not unlike people in other professions attending business or research seminars or conferences, etc., on their own ticket to maintain professional competence (MPC). Or, say, security guards going to the target range on their own to keep up skills, etc. You buy a boat, then document your routine use of it, making some portion of that dedicated to MPC. The corresponding proportion of fixed and repair costs should be deductible. I would say if your job demanded “maritime work“ as little as two or three days, perhaps one week, per year you’d be justified in sustaining maintenance of your skills throughout the entire year, etc. Afterall, how often per year would a security guard actually fire the weapon at someone?

Note, this would not be a business-expense deduction, but a job-related, itemized personal deduction.
 
Last edited:

capta

.
Jun 4, 2009
3,997
Pearson 530 Admiralty Bay, Bequia SVG
When I was operating yachts for an owner, often I would meet with their accountant and we would choose one of the three options.
1) operate the vessel at a loss as a tax deduction. This required the vessel to be registered as a business.
2) operate at a break even. Just pay her own way, which is quite difficult. IRS doesn't like a break even business.
3) operate the vessel at a profit. Perhaps the easiest, with a good broker.
I had a friend that was the captain of one of those 100' Rhodes motor sailors and he described his job not a the captain, but as someone who had to spend $140,000.00 a year on the boat, not including crew pay. That year he broke the boom and had the Sitka Spruce flown from Alaska to Antigua, for a new one!
Ain't yachting fun? lol
 
  • Like
Likes: NotCook