Declaring your boat as a second home for IRS taxes

I understand that the interest paid on a boat loan can be deducted on one's boat IF, the boat has a sleeping area, galley, toilet/shower AND you stay on it at least 14 days a year.* You can also deduct your reg. fees as well.* I am assuming you could also deduct the county taxes assessed on the boat and moorage as well, is this correct?* Cost of USCG documentation fees as well, I assume.* My question is this, can one deduct what the marina charges per month for your berth?* I'm thinking probably not, but thought I'd ask.

Pattik

FWIW my wife's first husband was an IRS agent for a long time. She told me that he had told her that two of the main triggers for an IRS audit are claiming a home or part of a home as a work expense, and claiming something like a boat, RV, vacation cabin, etc. as a "second home."

Check out this article:

http://www.seattlepi.com/local/199197_boatshome11.html

http://madmariner.com/tip/022008

I'll definitely run this by my accountant, but I've heard this from quite a few boatowners as well as yachtbrokers as well.

-- Edited by Rocky on Monday 19th of July 2010 12:34:08 PM

-- Edited by Rocky on Monday 19th of July 2010 12:35:09 PM

It is true....didn't know about the registrations fees and such. I have claimed a boat on my taxes for 15 years now and no sign of an audit....knock on wood.

As long as one stays within the limits of IRS's rules on this, I would think you are fine. I was a real estate agent for 20 years and claimed a small portion of my home as an office and never had an audit either. But, I followed it right down to the letter on what was allowed and it worked fine. Our CHB meets all the criteria, head, aftcabin, galley and toilet and we log in our logbook every time we are there, which I think would be important to substantiate the 14 days per year requirement. I'll still run this by my CPA, but happy to see that others are doing this without consequence. Thanks for you input Baker

No problem. And also note that unless you are going to use your boat as an income generating business, then that 14 day requirement does not apply. I think the author somewhat "glazed over" a portion of the IRS rules and got them confused with something else.

I do know that if you are going to claim your boat as an income generating business(ie deduct expenses) then the MAXIMUM you may use your boat for YOUR pleasure is 14 days in a year. I don't know if she was getting confused and potentially confusing you. But there is no rule stating that you must stay on your boat 14 days a month to write it off as a second home....maybe I missed something....and quite possibly I am confused...

-- Edited by Baker on Monday 19th of July 2010 01:42:08 PM

Baker,

The first link stated:

Living on a boat isn't required, though. All that's needed is a sleeping platform, toilet and cooking facilities, and some indication that the owner stays overnight on the boat at least 14 days a year, according to Internal Revenue Service regulations

The second link somehow combined the renting of your boat with the 14 days per year thing and frankly that was confusing, or confused me.

Maybe I am confused, but I read several articles and my general gest of it was that for the boat to constitute a "second home" one had to spend at least 14 days per YEAR, not month.
I'll still run this by the ol' CPA and make sure, but this actually makes some sense to me. Its not much of a second home if you aren't spending some time there.

Yeppers....the CPA should know! And the article did confuse me a bit.

I'm thinking I should be able to deduct something for my little foray into commercial fishing

Perhaps the second home too.

Heck the IRS should owe me money.

SD

Okay Baker, just got off the phone with my CPA. She tells me most definitely I can claim the interest on the boat loan and the county property taxes, however, can't claim monthly marina fees...drat it all. State reg/tags are deductible as well and she is researching whether the USCG documentation fees are deductible. As far as the 14 days, you are absolutely correct. If you rent your vessel out, you are required to have stayed on it a min. of 14 days. The 14 days DOES NOT apply if you don't rent the boat out.

Thanks for clearing that up!!!!

Well now we know. I never bothered with this with our old 30' woody, but definitely going to do it on our CHB. Every little bit helps, as they say. Thanks for your input.

FWIW: Here in Canada, we don't get a deduction for our first home, unless we are using it to generate income. Then the portion used for that purpose can be the source of deductions for such things as interest, taxes, heating, etc. The same applies to anything else, such as a second home, boat, etc.
No deducting losses on the boat as income generator against other income, unless the boat income is intended to be your primary source of income.
Still trying to understand the reasoning behind having your home deductible in the first place? Isn't that a major part of what caused the latest credit crunch?

Keith, not really. I think the ability to deduct interest on a home in a capitalistic economy encourages people to buy....which boosts the economy. What caused this last crash was a bit more than that!!!!

Baker is right, anymore owning a home and deducting the interest on the mortgage is one of the last real deductions most "average" Americans have, along with the property taxes that go with that mortgage; so it stands to reason its a great incentive for folks to buy homes.

Rocky wrote:

Baker is right.....

Click to expand...

WOOOOHOOOO!!!!



*






-- Edited by Baker on Monday 19th of July 2010 11:09:50 PM

Sorry....just never get to hear those words....

*
We are sort of back wards we declare our condo as our second place to live!* For the last 13 year been deducting the interest and related tax for both the condo and the boat.* On the tax *form I do not break them out but report one total figure.* With the high interest payments and tax the total of both proable do not equal to many tax payers interest and tax on just their home.**

The IRS puts out a*table/schedule*of ranges based on income for tax deductions.* As long as you*stay in the range your should be OK.* I get the table from the companay CPA each year.*****

Without the interest as a tax item there would be NO $100,000 -$2,000,000 motor homes sold.

Good point FF.

Baker: Give me a break, bet your wife tells you at least once every couple years you are right.....LOL

HAHAHA!!!! Just having a little fun over here....