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Navigate Tax Rules for Mortgage Interest

(posted: July 22nd, 2016)

Claim mortgage interest deductions for your boat

If you own a boat that provides some of the creature comforts of home, you may be entitled to tax benefits normally associated with a fixed dwelling.

Strategy

Claim “mortgage interest” deductions for the boat. As long as you meet certain requirements, you're entitled to deductions for interest you pay, just like the mortgage interest paid on a second home.

Generally, you're allowed to deduct qualified mortgage interest paid on a principal residence and one other home, such as a vacation home in a resort area. The deductible amount is limited to interest paid on acquisition debt of up to $1 million plus interest paid on home equity debt of up to $100,000.

The IRS defines a home for this purpose as “a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.” In other words, if your boat has a galley, sleeping quarters, and a head, you should qualify. But you can't simply throw a cot or a sleeping bag on the deck.

Tip: Of course, if you claim interest deductions for a boat as a second home, you might have to forgo deductions for another place. Consider all the tax angles.

Please Contact Us with any questions.

"Money is hard to earn and easy to lose. Guard yours with care."
-Brian Tracy


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