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What's the Mortgage-Interest Deduction for That Yacht?

I wouldn't be in this business if I weren't nosy. So the $17 admission fee to the giant sailboat show in Annapolis last weekend was thrifty entertainment, allowing me to spend the afternoon wandering below deck on yachts worth more than my house. The really tricked-out ones had all sorts of sea-worthy goodies like radar and automated sail-trimming gear--most of which is way beyond my limited knowledge of sailing. Below deck, some of these yachts were trimmed out with granite countertops, dishwashers, full-size showers, large flat-screen TVs and even a washer and dryer.

These boats also come with a mortgage interest deduction. If a boat (or an RV) has a place to sleep, bathe and cook, it counts as a home and may qualify for the deduction. Taxpayers, married or single, can deduct interest on up to $1.1 million used to buy or rehab their first and second homes, combined. There will be more potential tax deductions on display next weekend, when Annapolis hosts the power boat show.

What do you think? Should boats and RVs qualify for the mortgage-interest tax deduction?

By Elizabeth Razzi  |  October 13, 2009; 6:00 AM ET
Categories:  Buying , Home features , Mortgages , Outdoors , Taxes  
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Comments

The IRS only allows you to deduct your boat payments, as a mortgage, if you claim the boat as your residence. In my opinion people should be able to deduct payments on their residence. It doesn't matter if it is a boat, house or mobile home. Heck, if you live in a cardboard box and make payments you should be able to deduct those also. I don't think the government should be able to discriminate against people for their choice of residence. I lived on a boat down here in Florida for 3 years. It was just more affordable at that point in my life. My 1979, 41' boat cost $50K and was a great place to live.

Posted by: joeasap | October 13, 2009 11:11 AM | Report abuse

Joe, I am pretty sure that's not true based on the sheer number of people who told me they claimed the mortgage deduction on small boats that they didn't live on.

Posted by: bbcrock | October 13, 2009 4:36 PM | Report abuse

The boat has to be your first or SECOND residence, i.e. vacation home, to qualify for the deduction.

Posted by: Erazzi | October 13, 2009 7:03 PM | Report abuse

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