Tax Day and Your Boat/RV Loan

You likely dread it with the same intense passion that you love your boat or RV. It’s the flipside of fun, and it’s here: tax day.

From politics to the household account, taxes invade every part of our lives. Some people obsess about it; others whistle past the IRS graveyard with nary a passing thought. If you have a boat or RV loan, you should enjoy your purchase while acting like neither of these extremes. You should, though, arm yourself with information. For example, could the interest from your boat or RV loan be deductible? Possibly. As always, it is important that you check with your own tax adviser regarding your specific circumstances.

The IRS code states that taxpayers can deduct interest on loans for up to two qualified residences—that is, a primary home and one additional qualified residence. That second additional qualified residence could be a boat, for example. A qualified residence must have basic living accommodations including sleeping space (berth), a toilet (head), and cooking facilities (galley). If the boat is chartered, in order to qualify for the interest deduction, the taxpayer will have to use the boat for personal purposes for either more than 14 days or 10 percent of the number of days during the year the boat was actually rented.

Two situations complicate the deductibility of interest for a boat loan. If you are using a home equity line to finance a boat purchase, you may be limiting your opportunity to deduct the interest. The mortgage interest deduction is limited to interest paid on home equity loans up to $100,000. So if your boat loan exceeds that amount, your deduction won’t count. Borrowing against a stock portfolio to purchase a boat creates complications in interest deductibility as well. To be eligible, loans should be secured by the second qualified residence, not a portfolio held at a brokerage.

If this is confusing to you, turn to the experts. The professionals at Newcoast Financial Services work with clients one-on-one through the entire loan application and approval process. Newcoast loan specialists have years of experience and are available to help answer your questions throughout the process. Working with one of the largest networks of quality lenders in the marine and RV industries, Newcoast ensures that customers are offered not only the most competitive rates, but also have the most options available in their financing packages.

Kyle Vollenweider, Executive Vice President at Newcoast Financial Services, has more than two decades of experience in the marine and recreational vehicle financing business. Vollenweider cautions that tax situations are as individual as a social security number and are best overseen by tax professionals. One of the most enjoyable aspects of his work is helping to navigate customers through the financial aspects of owning a boat or RV, including the tax implications.