Boat Owners May Have Federal Tax Benefits Availabl

Just saw this on the Outdoor Wire today:
Boat Owners May Have Federal Tax Benefits Available

ALEXANDRIA, VIRGINIA - Recreational boat owners who paid state sales taxes on a boat purchase, or those who secured a bank loan to finance a boat, may have some tax deductions available when filing their 2008 federal income tax return.

The Sales Tax Deduction

For boat owners who paid substantial state sales taxes on a new or used boat purchase last year, the Tax Extenders Act of 2008 signed by President Bush on October 3 continues to offer a federal tax benefit with a deduction for state sales taxes. Boaters must choose either the state sales tax deduction or state income tax deduction on their federal tax return -- you cannot take both.

In addition, to take the state sales tax deduction, the sales tax on a boat purchase must be applied at the same tax rate as the state's general sales tax. In order to claim the sales tax deduction, tax returns must be itemized. State sales taxes are entered on IRS form Schedule A, line 5b.

The Boat Loan Deduction

For those owners with a secured boat loan, mortgage interest paid on the loan may be deductible from your federal income taxes. Taxpayers may use the "second home" mortgage interest deduction for one primary home and one second home and must itemize deductions on their returns. A boat is considered a second home for federal tax purposes if it has a galley, a head, and sleeping berth.

Some boaters may be unaware of this potential tax benefit because not all lending institutions send borrowers an Internal Revenue Service form 1098 which reports the interest paid. Not receiving the form does not preclude taking the deduction. If a 1098 is not available, boaters should contact their lender for the amount of interest paid and should enter it on line 11 on Schedule A along with the lender's tax ID number. If a form 1098 is sent, boaters should simply enter the amount on line 10 of Schedule A.

Sorry, AMT

For those who fall under the Alternative Minimum Tax, most deductions are unavailable as taxes are calculated differently. Boaters are urged to contact a tax preparer or financial advisor for more information.

For more details on the mortgage deduction, go to http://www.IRS.gov and download Publication 936 or the Fact Sheets. For state tax deduction information download Publication 600, which also includes state-by-state tax tables.

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About BoatU.S.:
BoatU.S. - Boat Owners Association of The United States - is the nation's leading advocate for recreational boaters providing its 600,000 members with government representation, programs and money saving services. For membership information visit http://www.BoatUS.com or call 800-395-2628.

Media Contact:
Scott Croft, 703-461-2864, SCroft@BoatUS.com

That information is correct, however, if you live in a state with State Income Tax, you have to choose between the sales tax deduction or the state income tax deduction. Lastly, both are available only if you itemized your deductions on your tax return.

The second home/vacation home info is correct as well, but again, only as an itemized deduction.

In california you can write off the property tax paid.

would a program like turbo tax know this?

Turbo Tax knows this. I've used it in TN where we do not have a state income tax and can deduct sales tax. Boats, cars, and other large purchases qualify for additional sales tax deduction above the "standard" based on income.

yup yup! writing off the sales tax for the boat and the car this year.