Tax Tips For Boaters

December 9, 2019

Blue sailboat on water.

December is all about the holidays, but the end of the year also means it’s time to start thinking about taxes.

New boat owners, particularly, will likely have questions for their tax advisor about whether interest on boat loans or owning a boat is tax deductible. While the folks at Sterling Association can give you general guidelines, we advise you to consult your tax preparer and check our overview of Internal Revenue Service rules about Tax Deductibility on Boat Loans on our website.

To determine whether you can receive a tax deduction on a boat loan, the IRS considers whether your boat qualifies as a residence or is used for business as a charter service. According to IRC section 163(h) (4), a boat will be considered a qualified residence if it is one of the two residences chosen by the taxpayer for purposes of deductibility in the tax year. A qualified residence must have basic living accommodations including sleeping space (berth), a toilet (head), and cooking facilities (galley). If the boat is also chartered, 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, to qualify for the interest deduction in accordance with IRC section 280A(d)(1).

If you’re thinking of upgrading your boat next year, we represent some 17 different lenders to find the lowest rate possible for your purchase. Financing your boat purchase can sometimes buy you a newer, larger or more powerful boat, a better trailer and all the gear that it takes to make boating safer and more enjoyable.

We offer loans as low as 3.9% APR. We specialize in boat financing for new and used purchases, refinances for boat loans, Coast Guard documentation and boat insurance. Contact us today for more information.