Boating season is here and a question we get all the time is “can I deduct my boat? You might be able to! Let’s take a closer look.
Can I deduct the interest expense for my boat?
Your boat could be considered a qualified home and therefore the interest you pay for your boat loan could be deductible as mortgage interest expense. The IRS defines a qualified home as a property that has sleeping, cooking and toilet facilities, and the qualified home secures the mortgage debt. Smaller boats without a bathroom or cabin area typically do not qualify.
Mortgage loan interest is deductible only if you itemize deductions on your tax return. The deduction is also limited to interest on up to $750,000 of mortgage debt.
Can I deduct expenses entertaining clients and business associates on my boat?
We don’t have a great answer for this one…. Unfortunately, no. If you are an employee, employee unreimbursed business expenses are nondeductible. If you are self-employed, unfortunately entertainment is not deductible as a business expense.
I rent my boat to others. Can I deduct my expenses?
Do you rent, lease or charter your boat to others? If so, many of your boat related expenses can be deducted as a rental expense. Rental expenses are a blog for another day!
What if my boat is my business?
Let’s say you operate a commercial fishing business or provide boat tours. In this case, most of your boat related expenses will be a deductible trade or business expense.
Still have questions? Contact your ClarkSilva advisor today. In fact, you can invite them out on your boat and ask them…