Interest deductions for boats and seasonal homes?

P

patrick and linda

New member
It will be interesting to see if the interest paid on mortgages on boats, that qualify as second home and seasonal homes, purchased in 2018, will continue to be a write off under the newly passed tax reform. Heloc interest won't be deductible. Not sure how this will effect the sales of boats and real estate, but will mention for marginal buyers it might mean a no sale! Perhaps that's not bad either, as it would facilitate larger down payments and thus less likely for a buyer to find himself up side download!
 
The news and internet are full of speculations, but until the final bill, as signed. was been analyzed by experts, I don't think we can know for sure what the effect will be. If the amount of lowering of tax, is equal to, or greater than the deduction which one might have for write off of the boat loan, it should not make any difference. Many who can afford an expensive boat, were hit with the AMT in the past; although this is still present, it's margin has been increased.
 
Yes, there will be some negative implications from the new tax law on the real estate purchase side. But I doubt that boat sales will see any negative effects.

The 2 purchases couldn't be more different. One is a time tested appreciable asset. The other is a "luxury" purchase. No boat will ever appreciate....EVER. Yes, claiming the interest as a second "home" or one's only home (liveaboard) is advantageous but can never be compared to a traditional piece of real estate.

Next year will be interesting. The new law should stimulate the corps. and in turn the markets will flourish but the 5-7 year outlook may be an automatic bear market. Get in now! Pump up your port ASAP and look in the 18-24 month range. Energy heavy. Big tech ,meh. Medium sized cloud/infrastructure, yeah, go for it. Medical?? YES
 
The 2 purchases couldn't be more different. One is a time tested appreciable asset. The other is a "luxury" purchase. No boat will ever appreciate....EVER.
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Some boats have appreciated--so you can never say--'ever'. Some houses depreciate--and historically this has be substantial...so again....Ask those who have lost homes during the recent recession..!!
 
thataway":hucy5mix said:
The 2 purchases couldn't be more different. One is a time tested appreciable asset. The other is a "luxury" purchase. No boat will ever appreciate....EVER.
Click to expand...

Some boats have appreciated--so you can never say--'ever'. Some houses depreciate--and historically this has be substantial...so again....Ask those who have lost homes during the recent recession..!!
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Okay Bob, I'll give you that. There may be some unicorns out there.
 
C-dory's might not appreciate compared to Houses But where can you buy a boat use it improve it and get back most if not all of your money win win win in my book
BTW sold 2 c-dorys broke even on one, made money on the other( after fixing it up) and after keeping them for a few years .
 
My feeling is the "Big D" is not into boats (too slow) as they don't meld
quite right for him or his jet setting family and friends. Maybe airplane
owners will get more recognition in the new tax law.

Aye.
Grandpa used to say, "Speed changes you."
 
thataway":nfrh0h3w said:
Some houses depreciate--and historically this has be substantial...so again....Ask those who have lost homes during the recent recession..!!
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Tell me about it! My house lost almost 1/3 of it's value in the last real estate "contraction". Still not back up to what I paid for it even after 10 years.
 
Trump not only owned a $100 million dollar yacht 281 feet long, but also bought and sold Amel shipyard. He had a fantisy of building the World’s largest yacht, but finances stopped the attempt before it was finished. These experiences may have soured his outlook on “boats”.
 
So, on December 18 we sold our 4700 sq ft, 6 bedrooms, 4 bath, 3 car attached garage with a very nice lake view located in an affluent neighborhood. We netted about $55 k less than we had in it. November 10, 2016 we sold our 26' Nordic tug for $79k or about twice as much as what it Originally sold for in 1986. i had more in the Nordic than what I sold it for but never the less got 79.
 
My best friend is a CPA and is tied into the latest info on the tax bill. He looked at my 2016 taxes and says that if the bill is left alone and not modified that I could be saving about 2 to 4 grand next year after I file for 2019. Much higher pay back than the second home deduction I have on my motor home. So, interest deductions are fine with me to reduce or get rid of. I'm sure some folks will get hit to some degree, but they will be well north of me on the wealth scale. I'm squarely in the middle class, so the new tax bill will likely let me add some new electronics to Poopsy or perhaps an electric start, remote stear kicker.
 
The National Marine Manufacturers Association (NMMA) stated in an article that the new tax laws were a "win" for most boaters, since it preserved the boat as second home, as well as some business deductions, and didn't impose additional taxes...Of course if you paid over $750,000 for you C Dory you may see increased taxes!
 
There is a fallacy in general about home appreciation. Yes, they do appreciate. Mine went from 100 grand in 1989 to 330 grand this year. Uh oh! Guess what. modest 3 bedroom homes here costs 350 or so grand. So, for home appreciation to do me any good, I've got to sell it but then I'll have to spend as much or more to get into an equivalent home. Effectively, my home therefore hasn't appreciated in value.

Now, the Californio who sells there and moves here has a bundle left over after the deal because of the differences in home prices so he or she does profit from home appreciation. Or, I could profit from my homed appreciation if I sold and bought a beater or much smaller home on less property.

Homes as in boats are best bought, paid for in full and lived in, boated on and enjoyed. Buying and selling either chasing profit from appreciation is a slot machine game if significant gains are expected (In general).
 
Home appreciation wins depends on time and place. All of my my
Long distance sailing adventures were financed by appreciation of Calif. real estate. Double value in 3 to 4 years. Highly leveraged. Invest the profits and tax deferred until favorable rates. Probably dumb luck! But buying at the low of recent recession would have done the same. A friend bought Phoenix property at 25 to 30% of original cost. Now these houses are 20% over original cost. If he sold a tidy profit; but he continues to rent which makes his payments. On the other hand Dow is up 25% this year...and a lot more if one bought in 2009!

As for boats; buying a beat up cult boat, restoring and modernizing, IF you do the work can lead to significant profits. For example Cal 46 for 40k putting 30 k into it, using it 5 years and selling for 128 k. You have to enjoy the work!
 
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