Here is a summary of the tax and income benefits available to the owners of new yachts purchased and placed in charter as of 2016.
Usa yacht tax deduction. Your boat can be a viable source for tax deductions. This income exclusion which is adjusted for inflation only applies to earnings from work and sadly not to investment income. The federal budget proposes a new tax on luxury goods such as yachts personal aircraft and cars.
Your tax advisors wouldnt think twice about deducting the mortgage interest if you owned a mountain cabin or a beach cottage but they often dont realize that a boat also qualifies. Taxpayers who have a boat that qualifies as a second home can deduct loan interest. However there are certain exceptions described below.
Deduction is limited to the gross proceeds from the sale. Thankfully for boaters that provision didnt make it into the tax bill that President Trump signed into law in December 2017. Boat owners trying to make a profit off their boat can deduct a variety of associated boat expenses.
If you buy a boat or airplane for business use you must be able to show that you are running a legitimate business and are not just taking out fishing or flight charters as a hobbyTo avoid IRS scrutiny under hobby loss rules you must keep good business records show that you intend to make a profit and make a profit. Seafarers Earnings Deduction. If the charity sells your vessel you can claim a tax deduction for the amount the boat sold for not the appraised value if its higher or at least 500.
If you entertain clients on your boat you may be able to write off the cost of the event. Being able to take a one-time maximum deduction of up to 500000 of the purchase price of the yacht in the year that you buy it according to Section 179 of the Internal Revenue Code. The equipment must be used for business purposes more than 50 of the time to qualify for the Section 179 Deduction.
Under Section 179 of the Internal Revenue Code you can take a one-time expense deduction in the year of purchase equal to the purchase price of your yacht up to a maximum deduction of 500000. The state and local tax deduction commonly called the SALT deduction is a federal deduction that allows you to deduct the amount you pay in taxes to your state or local governments. New Yorks new budget bill includes an obscure provision tucked inside section SS exempting the portion of a boats price above 230000 from the sales tax.