They say it takes love to make a house a home, but all it takes to make a boat a second home is a place to sleep, a place to cook, and a place to, well, you know.
If you've borrowed money to buy a boat, put a mattress in the bow, installed a camp stove, a port-a-potty or head, and a sink, and as far as the government is concerned, you've got a second home -- and a sizable tax deduction.
Whether it's a runabout with a tiny cabin or a multi-million-dollar yacht, the second-home deduction for interest paid on boat loans is the biggest tax deduction in American recreational boating.
In fact, many boat manufacturers have two purposes in mind when installing amenities in boats: Passenger comfort and tax deductions.
The National Marine Manufacturers Association says that approximately 3 percent, or 500,000 pleasure boats in the United States are large enough to qualify for the second-home deduction -- yet only about 100,000 people actually live full time on boats, recreational vehicles and vans combined, according to the 2000 Census.
Yet full-time living on a boat isn't required, just a minimum of 14 days a year, according to Internal Revenue Service regulations.
But boat owners who don't stay overnight at least 14 days, yet are aware of that requirement are committing tax fraud and could face substantial civil, and perhaps criminal, penalties.
If you're considering taking the second home deduction, make sure you've stayed overnight at least 14 days, have the required amenities, and have talked to your tax advisor.
If you've borrowed money to buy a boat, put a mattress in the bow, installed a camp stove, a port-a-potty or head, and a sink, and as far as the government is concerned, you've got a second home -- and a sizable tax deduction.
Whether it's a runabout with a tiny cabin or a multi-million-dollar yacht, the second-home deduction for interest paid on boat loans is the biggest tax deduction in American recreational boating.
In fact, many boat manufacturers have two purposes in mind when installing amenities in boats: Passenger comfort and tax deductions.
The National Marine Manufacturers Association says that approximately 3 percent, or 500,000 pleasure boats in the United States are large enough to qualify for the second-home deduction -- yet only about 100,000 people actually live full time on boats, recreational vehicles and vans combined, according to the 2000 Census.
Yet full-time living on a boat isn't required, just a minimum of 14 days a year, according to Internal Revenue Service regulations.
But boat owners who don't stay overnight at least 14 days, yet are aware of that requirement are committing tax fraud and could face substantial civil, and perhaps criminal, penalties.
If you're considering taking the second home deduction, make sure you've stayed overnight at least 14 days, have the required amenities, and have talked to your tax advisor.