It doesn’t matter if you’ve a sailboat or motor boat we all know they are large holes in the water into which you pour money. However, when Congress adjourned for 2007 they left in place two federal income tax deductions of potential benefit to boat owners.
Sadly, I didn’t think to write about this until now but maybe you’ve not filed yet as it is a ways off to April 15th. So, if you’re not done with your tax return you might find a few bucks here.
A boat is treated like a second home for federal tax purposes if it has a galley, a head, and a sleeping berth. Interest paid on a loan is deductible from your federal income taxes. You can use the mortgage interest deduction for one primary home and one second home although you have to itemize deductions on your return.
You may not be aware of this as not all lending institutes send out the IRS form 1098 which reports the interest paid. If you didn’t get one then contact your lender for the amount of interest you paid. It should be entered on line 11 on Schedule A along with the lender’s tax ID number. If you got form 1098 simply put the amount on line 10 of Schedule A.
Also for those of you who had to pay sales tax when you bought your boat, check with your tax preparer of financial adviser for more information as you maybe able to claim a deduction.
For more information on the mortgage deduction you can visit the IRS web site (click here) and download Publication 936 or the Fact Sheets. State tax deduction information is found by downloading Publication 600, which also includes state-by-state tax tables.
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