Thinking about purchasing a boat or already own one? Have you treated it as a luxury or a necessity during these hot summer days? Here are some tips you’ll certainly find handy while sailing through the turbulent sea of boat taxes:
- Mortgage Interest Deduction
Not all boats can qualify for a mortgage interest deduction, but it is the largest tax deduction you can use for your floating abode by default. In order to qualify for this particular boat tax benefit, you need to prove that your “floating” home is actually your second residence. How? Well, your boat has to come with adequate sleeping, toilet, and cooking facilities. It’s worth mentioning that you don’t have to sleep on your boat. However, you are required not to sell or rent it out during year to qualify. Boat Lenders usually don’t issue Tax form 1098 like you receive with your main home loan so often this deduction can be overlooked.
- Sales Taxes
In case your sailing desires are more oriented toward, let’s call it a “traditional” boat than a prestigious yacht, you can still write off the Sales Tax. However, for a specific deduction to work in your favor, you should either include a sales receipt, or an IRS’ sales tax table. Both of these are eligible methods for a sales tax reduction. For more information on deductible Taxes click here.
- Personal Property Taxes
You can deduct both your state and local taxes associated with your boat under a presumption that they’re based on your boat’s value. Also, don’t forget that they’re included on an annual basis.
- Business Related Expenses
Be cautious when writing off business expenses related to your boat. The IRS says you can’t use this deduction if the main purpose is an entertaining or recreational one. The good news is that you’re allowed to mix a little bit of business with pleasure, and still be eligible for a deduction; if you’re entertaining your customers on your boat for strictly business purposes, you can write off the event expenses like a portion of the food or gas, but you cannot write off the cost of the boat itself.
Traversing the maze of taxes and available deductions for your business as well as personal interests is not always easy. Holdsworth & Co., CPA’s is not only here to help you with boat taxes but with all of your business accounting needs. Contact us for a free consultation and alleviate your staff the time and expense of managing these tasks internally.