Tax Deductions For Your Yacht or Boat

palm harbor marina yacht - #1 Harbor in South Florida

While boats and yachts are a great source of enjoyment for many, they can also be a tax deduction for some. A majority of boat enthusiasts use their boat as a means of relaxation, however, there are others who use their boat or yacht for a variety of reasons. Some of these reasons allow for your boat or yacht to be used as a tax deduction. Below we will discuss a few ways you can use your boat to qualify for these deductions.

Boat as a Second Home

This may be the largest tax deduction there is for recreational boating. All you need to have on your boat are cooking facilities, a toilet (yes, even a portable one counts!), and a place to sleep. If you decide to rent your boat out to others, you do need to stay on the boat 10% of the time you have rented it out (ex. 160 rental days = 16 days)

Boat as a Charter

This can be anything from taking clients out fishing to whale watching to sightseeing. You will be able to claim equipment upgrades/purchases, slip/storage fees, fuel, as well as maintenance & depreciation. To claim these, you must be able to show that you have earned a profit at least three years out of every five, and you can only deduct the time the boat was chartered (i.e. you can't deduct all of the above if you use the boat for recreation as well). You will need to keep extremely good records, as you will be taxed at both the state and federal levels. You may want to check into commercial boat insurance to run a charter boat business.

Boat as Transportation

This comes into play if you live on an island and use your boat to commute at least half the time to work. When using your boat for commuting, you can deduct a few different boating expenses including fuel, slip fees, maintenace repairs, insurance, and crew payment. However, if you also use your boat to entertain, you may not be able to claim this deduction.

Boat as Client Entertainment

This is one of the most abused deductions, so you will need to be extremely careful when claiming. This is due to the fact that you are, in the most simple of terms, mixing business with pleasure. You will need to keep meticulous records on reason for the particular outing, client names, dates, locations, what expenses were incurred, as well as what you expected to benefit from the meeting. You will also be able to deduct up to 50% on the cost of food, drinks, fuel, mooring, & tournament fees (if applicable).

Boat as Donation

If you are done with or looking to upgrade your boat, you may want to look into offering it as a donation. When donating your boat to charity, the IRS allows you to deduct the market value of your boat on the day of your donation (this is not the amount you originally paid for it). You can use an appraisal guide to find out the market value of your boat. Be sure to read the fine print as to what the charity intends to use your boat for. After donation, these stipulations may determine how much you can deduct.

Our highly knowledgeable team at Palm Harbor Marina may be able to help answer your questions regarding any of these deductions. If we can't answer them, we can put you in touch with someone in the Palm Beaches area who can. We are a world-class South Florida marina welcoming the International yachting community with superior facilities, exceptional hospitality and available slips up to 250 feet, and we are at your service!