Is You Boat Tax Deductible?

However, recreational vessels with a sleeping berth, cooking and toilet facilities will be treated equally with second homes and recreational vehicles that may qualify for some sales tax and mortgage interest deductions when filing (in 2019) a 2018 federal income tax return. Historically, borrowers could deduct home equity interest on loans up to $100,000 ($50,000 for married couples filing separately). Here are the details: 2017 Sales Tax Deduction The Tax Increase Prevention Act of 2014 continues to offer a federal tax deduction for state sales taxes paid on a recreational vessel. Boaters must choose either the state sales tax deduction or state income tax deduction on their federal tax return — they cannot take both. State sales taxes are entered on IRS form Schedule A, line 5b. For those owners with a secured boat loan, mortgage interest paid on the loan may be deducted from federal income taxes. Taxpayers may use the home mortgage interest deduction for one second home in addition to their primary home, and must itemize deductions on their returns. If a 1098 is not available, boaters should contact their lender for the amount of interest paid and should enter it on line 11 on Schedule A along with the lender’s tax ID number. If a form 1098 is sent, boaters should simply enter the amount on line 10 of Schedule A. Looking to 2018 The new limits on deductibility of mortgage interest and state sales taxes will kick in when boat owners calculate their 2018 tax liabilities along with changes to home equity loan deductions.

WASHINGTON, March 6, 2018 – Just two short years ago, Congress extended some boat sales tax and mortgage interest deductions for recreational boat buyers. Excluding home equity loans, those deductions remain for next year’s 2018 tax season with the recently passed GOP tax overhaul plan signed into law on December 22, 2017, albeit with some new lower limits on lending amounts, according to Boat Owners Association of The United States (BoatUS).

Before passage of the Tax Cut and Jobs Act of 2017, BoatUS, the nation’s boating advocacy, services and safety group, had concerns that boat owners would be singled out for negative tax treatment. However, recreational vessels with a sleeping berth, cooking and toilet facilities will be treated equally with second homes and recreational vehicles that may qualify for some sales tax and mortgage interest deductions when filing (in 2019) a 2018 federal income tax return.

The new Tax Cut and Jobs Act reduces the previous $1 million second-home mortgage deduction limit to $750,000. “Most new boats sell for far below this new cap, so we don’t think that will have much impact on the average boat buyer,” said BoatUS Manager of Government Affairs David Kennedy. However, what could affect buyers of smaller vessels is the act’s removal of the deductibility on interest for a home equity loan. Historically, borrowers could deduct home equity interest on loans up to $100,000 ($50,000 for married couples filing separately). “With the new tax law, that deduction is gone,” said Kennedy.

For the current 2017 tax season, the existing deduction remains in…

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