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#559503 - 03/05/15 06:27 PM Second Home and Charter
deepv Offline
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Admiral

Registered: 03/17/04
Posts: 8608
Loc: SoCal
Anyone here using their boat as a second home for tax purposes?

How about putting it up for charter as a business expense?

How is it working out for you if you have gone this route?

(I realize that the first one is more likely than the second one around these parts for sure.)
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72% of fatal boat accidents are caused by
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#559504 - 03/05/15 06:54 PM Re: Second Home and Charter [Re: deepv]
captkevin Online   content
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Registered: 10/02/03
Posts: 6988
Loc: Chicago, IL
Not sure I'd want to charter out a boat as nice as what you are looking for.
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#559505 - 03/05/15 07:18 PM Re: Second Home and Charter [Re: deepv]
deepv Offline
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Registered: 03/17/04
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RIGHT!! Me neither. Just seeing what others may do or have done. I'm pretty sure the pride is too high in these ranks to do that but you never know.
_________________________
72% of fatal boat accidents are caused by
boaters that haven't taken a safe boating course.


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#559508 - 03/05/15 08:20 PM Re: Second Home and Charter [Re: deepv]
GoFirstClass Online   content
Retired Boating Bum
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Registered: 11/21/03
Posts: 14782
Loc: Pasco, WA
Beachcomber qualifies as my second home. Actually, it's my first home since the house in WA and the condo in AZ are paid for.

I get to deduct the interest I pay on the loan every year, and that's about the only break I get on it.

Putting your boat out to charter is a whole different story. I've never done that so can't comment on it
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#559509 - 03/05/15 09:11 PM Re: Second Home and Charter [Re: deepv]
deepv Offline
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Registered: 03/17/04
Posts: 8608
Loc: SoCal
What about property taxes and the sales taxes paid at the initial purchase?

Maybe we "charter" it out to family and friends only.
_________________________
72% of fatal boat accidents are caused by
boaters that haven't taken a safe boating course.


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#559510 - 03/05/15 11:52 PM Re: Second Home and Charter [Re: deepv]
GoFirstClass Online   content
Retired Boating Bum
Grand Poobah

Registered: 11/21/03
Posts: 14782
Loc: Pasco, WA
WA doesn't have a property tax on boats, only on real property. We were allowed to deduct the sales tax we paid on the boat.

On a related note, if you have any equipment added to the boat and pay sales tax on that, you should be able to take the value of those items off the base value of the boat when they use that base value to compute your tax rates.
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"Beachcomber" 1995 Sea Ray 550 Sedan Bridge


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#559514 - 03/06/15 09:00 AM Re: Second Home and Charter [Re: deepv]
captkevin Online   content
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Registered: 10/02/03
Posts: 6988
Loc: Chicago, IL
Might also need to look at the effect on your insurance to charter boat.
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#559517 - 03/06/15 10:25 AM Re: Second Home and Charter [Re: GoFirstClass]
deepv Offline
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Registered: 03/17/04
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Loc: SoCal
Originally Posted By: GoFirstClass
WA doesn't have a property tax on boats, only on real property. We were allowed to deduct the sales tax we paid on the boat.

On a related note, if you have any equipment added to the boat and pay sales tax on that, you should be able to take the value of those items off the base value of the boat when they use that base value to compute your tax rates.


CA taxes 1% of the assessed value every single year. For my Sea Ray it was aroubd $150 a year. In this case it'll be more than that each month. UGH!
_________________________
72% of fatal boat accidents are caused by
boaters that haven't taken a safe boating course.


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#559547 - 03/07/15 10:26 PM Re: Second Home and Charter [Re: deepv]
gmcc Offline
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Registered: 05/05/07
Posts: 175
Loc: MD
I deducted the loan interet for several boats over the years. If I remember correctly the boats had to have a head, a galley and sleeping area. There was also a requirement for spending so many nights onboard. I would suspect that a charter would be treated like a rental property. Pros and cons on doing that. Talk to a tax person.
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#559548 - 03/07/15 11:16 PM Re: Second Home and Charter [Re: deepv]
MarkHB Offline
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Registered: 09/12/03
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Loc: CA
Can a Self Administered IRA own a boat?
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#559556 - 03/09/15 11:02 AM Re: Second Home and Charter [Re: deepv]
deepv Offline
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Registered: 03/17/04
Posts: 8608
Loc: SoCal
I'm thinking the Charter idea is our less we set up a club and only rent it out to friens and family. Of course a partnership with those same people would be more reasonable.

An IRA.. HMMM..
_________________________
72% of fatal boat accidents are caused by
boaters that haven't taken a safe boating course.


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#559559 - 03/09/15 11:36 AM Re: Second Home and Charter [Re: MarkHB]
Play Deep Offline
Admiral

Registered: 02/05/03
Posts: 1760
Loc: Northern Land of Lincoln
Originally Posted By: MarkHB
Can a Self Administered IRA own a boat?


I believe IRA's are prohibited from self dealing, owning real property such as a house or a boat would be considered self dealing. You would most likely have trouble finding a custodian to hold it.
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#559561 - 03/09/15 11:58 AM Re: Second Home and Charter [Re: deepv]
athiker Offline
Admiral

Registered: 12/02/03
Posts: 3862
Loc: Lake Norman, NC
These guys should know.

Pensco Trust Co

This is where I have my self-directed IRA, not recommending them, its just for a while there it was hard to find a custodian for self-directed IRAs. There may be many more now, I haven't shopped around in a while.

I own land in it, but do not rent back from it. Its actually "alligator" land...it just eats. A lake front lot I bought years ago as a long-term investment. There are more fees involved than a traditional IRA as well.

If I had it to do over again, with LT capital gains taxes where they are and the extra hassles, I don't think I would've bothered. I don't know why anyone would put an asset that is expected to lose value in a tax sheltered account, but may be missing something?
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#559611 - 03/14/15 12:17 AM Re: Second Home and Charter [Re: deepv]
Frantically Relaxing Offline
Admiral

Registered: 02/07/03
Posts: 11598
Our motorhome, the SkipperLiner, and the Party Cruiser all qualify as 'second homes'. The motorhome is our 'tax advantage' unit, but the only actual tax advantage is being able to deduct the loan interest. (and it's the only one we owe money on). Property and other taxes aren't deductible on a federal level on any of them, but all taxes and fees are deductible on our state taxes.

If you charter/rent/lease/charge someone to use your boat, then it becomes a business, and you'll of course need a biz license. As business equipment, virtually every $$ you spend on it is deductible. If your business shows a net gain, all of it can be spent on the boat and deducted, and you'll have no extra income or taxes to pay. But if you have a net business loss, you won't be able to deduct the loss from your other personal income. Losses can only be applied against the next year's biz income.

I'm sure there's clever loopholes available, but I'll never know about 'em.. wink

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1988 SkipperLiner 53x14
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#559628 - 03/16/15 12:28 PM Re: Second Home and Charter [Re: deepv]
deepv Offline
Safety Officer
Admiral

Registered: 03/17/04
Posts: 8608
Loc: SoCal
So it isn't permitted as a "Passive" business then.. Loses can only be deducted against actual income. That doesn't sound like it is worth it for the potential damages that may occur to the vessel. OTOH, the second home sounds good except in CA the ding you for 1% of the value each year in Property Taxes and according to what you are saying that won't be deductible on Federal Taxes. Maybe we take delivery in Ensenada?
_________________________
72% of fatal boat accidents are caused by
boaters that haven't taken a safe boating course.


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