Hey there!
We’re in the midst of tax season and as the April 15 deadline approaches, there’s no better time to discuss potential tax breaks for boat owners. Many boaters may be unaware that there are several ways to write off some of the cost of your boat to minimize your taxes.
Recreational boaters who purchased a new or used boat this past year could qualify for a tax deduction on paid state sales taxes. For those who have become boat owners within the last year, the Tax Extenders Act of 2008 continues to offer a federal tax deduction for state sales taxes. However, it’s important that boaters know that they must choose between state sales tax deduction and state income tax deduction when filing their 2009 federal tax returns.
For those owners with a secured boat loan, mortgage interest paid on the loan may be deducted from your federal income taxes. Taxpayers are able to deduct the mortgage interest on a second home in addition to their primary home mortgage interest tax deductible expenses. In order for a boat to be considered a second home for federal tax purposes, its basic living accommodations must meet IRS qualifications.
Also, keep in mind that taxpayers can only claim one second home in addition to their primary home. With that said, if you already have a second home, you must choose between your boat or second home for the tax deduction.
Considering every tax situation is unique, it’s extremely important for boaters to contact a tax preparer or financial advisor for more information applicable tax deductions. For more details and information, visit www.IRS.gov. For the mortgage deduction, download Publication 936 or the Fact Sheets. For state tax deduction, download Publication 600.