NEWS from BoatUS
Boat Owners Association of The United States
880 S. Pickett St., Alexandria, VA 22304
BoatUS Press Room at www.BoatUS.com
FOR IMMEDIATE RELEASE
Press Contact: D. Scott Croft, 703-461-2864, SCroft@BoatUS.com
Two Federal Tax Deductions Remain For Boaters
When Congress adjourned for 2007, they left in place two federal income tax deductions of potential benefit to boat owners.
A boat is treated like a second home for federal tax purposes if it has a galley, a head, and sleeping berth. Mortgage interest paid on the loan is deductible from your federal income taxes. Taxpayers may use the mortgage interest deduction for one primary home and one second home and must itemize deductions on their returns.
Some boaters may be unaware of this potential tax benefit because not all lending institutions send borrowers an Internal Revenue Service form 1098 which reports the interest paid. Not receiving the form does not preclude taking the deduction. 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.
The other tax benefit is a deduction for state sales taxes. However, this may no longer be available after the 2007 tax year if Congress does not act to extend it. This deduction may be appropriate for boaters who paid substantial sales tax on the purchase of a new or used vessel last year. Boaters must choose either the state sales tax deduction or state income tax deduction on their federal tax return — you cannot take both.
In addition, to take the sales tax deduction, the sales tax on a boat purchase must be applied at the same tax rate as the state’s general sales tax. In order to claim the sales tax deduction, tax returns must be itemized. State sales taxes are entered on Schedule A, line 5b.
For those who fall under the Alternative Minimum Tax, most deductions are unavailable as taxes are calculated differently. Boaters are urged to contact a tax preparer or financial advisor for more information.
For more details on the mortgage deduction, go to http://www.irs.gov and download Publication 936 or the Fact Sheets. For state tax deduction information download Publication 600, which also includes state-by-state tax tables.
BoatUS – Boat Owners Association of The United States – is the nation’s leading advocate for recreational boaters providing its 650,000 members with a wide array of consumer services.