Re: Tax question
 

Anyone know about this ?

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hp 2000 , i belive that your social # would have to be on the mortgage to qualify the boat as a second home.

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hi-perf-2000,
The way I read this is that you could claim it as your second home even if you don't have a mortgage on a first home, I don't think the mortgage status of your first home would have anything to do with your second home. If your first home was paid off and you didn't have a mortgage on it you still should be able to deduct the interest on a second home. Or if you rent your first home why wouldn't you be able to write off the interest on a second home?

I'd go for it if you have a spot to sleep,cook and poop.Pillow, bic lighter and bucket.

Just my$.02
Caleb

Re: Tax question
 

I've never received anything in the mail from any bank from which i have financed a boat from in the past. Do i need to call them and get an intrest statement ?

here's another question.... I just bought this boat in May. My old boat (which would also qualify) was also financed, and i sold that in April. So would i need 2 statements ........ 1 from each bank ?? Or can i only claim the new boat ?

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The tax people I deal with are VERY familiar with this...

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Where do you report the interest on the itemized deduction form?

I recall a blank for interest that was not reported on your 1098, is this the correct place?

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TSSTEPH,

Report the interest on a boat loan the same way or place you report the interest on your primary mtge. Technically you are claiming the Boat Loan as a second residence. Any questions you can call the IRS, they can tell you exactly on your particular situation.

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On your schedule A, line 11."Home mortgage interest not reported to you on Form 1098."

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We claim interest on our boat every year and our tax person never says anything. They do not send out interest paid forms on boats in Ohio, so we call every year to get the interest paid, so if you receive nothing in the mail I would call your bank.

You should be able to claim both boats. If it sold a house last year and bought a new one, you'd claim interest on both (at least we did last year).

Re: Tax question
 

Tax deductibility of interest on yacht loans
Under IRC section 163 (h)(2) a taxpayer may deduct any qualified interest on a qualified residence, which is defined as a principal residence and one other residence owned by the taxpayer for the purpose of deductibility for the tax year. IRC section 163(h)(3) defines qualified residence interest as any interest which is paid or accrued during the tax year on acquisition or home equity indebtedness with respect to any qualified residence of the taxpayer.

In accordance with IRC section 163(h)(4), a boat will be considered a qualified residence if it is one of the two residences chosen by the taxpayer for purposes of deductibility in the tax year as long as it provides basic living accommodations such as sleeping space (berth), a toilet (head), and cooking facilities (galley). If the boat is chartered out, the taxpayer will have to use the boat for personal purposes for either more than 14 days or 10% of the number of days during the year the boat was actually rented, in accordance with IRC section 280A(d)(1).

Form 1098 is not necessary in order to receive the qualified interest deduction. In accordance with IRS instructions for Schedule A, form 1040, if the taxpayer does not receive form 1098, deductible mortgage interest should be reported in line 11 instead of line 10 on Schedule A.

Borrowing against your unencumbered home has limitations
Home mortgage interest deduction is limited to interest paid on mortgage debt used to purchase or improve a residence, or to refinance the remaining balance on a purchase or improvement. If the money isn't used for the home, the interest expense does not qualify for the deduction.

So does a home equity loan
Home mortgage interest deduction is limited to interest paid on home equity loans up to $100,000. By using a home equity loan, you may limit the amount of interest that is deductible, if your boat loan balance exceeds $100,000.

Second home mortgage interest deduction is limited to interest paid on second homes that are secured by that second home. You would need to have a written collateral agreement (security agreement) indicating the boat as collateral.

The preceding information was prepared by Deloitte & Touche, LLP