Sail Away With Boating Tax Breaks

​It's well known that a home can be a valuable source of tax deductions while you own the place and a six-figure tax exclusion when you sell. But did you know you can reap tax benefits on both land and water? If you're a boat owner, you may be in line for the following tax breaks:

• Mortgage interest: You may not think of your boat as a home, but you can claim mortgage interest deductions (within the allowable limits) for one qualified residence besides your principal residence. A boat meets the requirements if it has a galley, sleeping quarters and a head. But you can't just dump a cot or sleeping bag on deck.

• Sales tax: Depending on your situation, deducting sales tax instead of state income taxes might be more beneficial. You can choose to use a simplified IRS table in lieu of tracking actual sales tax expenses, and then add the sales tax for a boat to the table amount to increase the deduction. Be careful with your calculation - the deduction for state and local income taxes (SALT) caps at $10,000.

• Rental property: Just like a building, you may rent out your boat for fishing or sightseeing excursions. The basic tax rules for vacation home rentals apply. Typically, you may deduct related expenses like maintenance costs, fuel and supplies, plus depreciation. Keep in mind that a loss may not be available if you use the boat personally for more than 14 days.

• Charitable donations: If you're upgrading or have lost your passion for boating, you can donate your boat to charity. Generally, the deduction is based on the fair market value (FMV) on the donation date, if certain conditions are met. You can find out the FMV for your boat, based on its condition, from an online guide. Or better yet, have it appraised.

Call today with tax savings questions about your boat.

"Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
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For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

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