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Contact: Margaret Mitchell
Telephone: 301-212-9608
E-mail: mmitchell@naeahq.org
Tips on How To Make Financing Your Boat or RV Tax Deductible
Gaithersburg, MD—June 3, 2002—Summer is here and perhaps you're wondering whether to buy a boat or an RV for your vacation and if the interest on the loan is tax deductible.
There are two options available to those who wish to take part in this tax-deductible financing. The first option, which applies to homeowners, is to finance the purchase using a home-equity loan. According to IRS Publication 936, in most cases, regardless of what the loan proceeds are used for, it is possible to deduct the interest on a home equity loan of up to $100,000. Generally, homeowners are allowed to deduct interest on up to a total debt of $1,000,000 that is used for buying or improving a primary residence and second home.
The second option for “cashing” in on this type of deduction is if the boat or RV has sleeping, cooking, and toilet amenities. These options, or basic living conditions, may quite possibly make the boat or RV qualify as a second home, thus, making the interest on the RV or boat loan deductible. One thing to make sure of during the financing stage is that you secure the loan by the boat or RV. To qualify for mortgage interest deductions, the RV or boat must be pledged as security for the loan.
“A great number of taxpayers can expand their home mortgage interest deduction by purchasing an RV or boat,” says Gerry Voss, EA. “Not only do you get the fun of having an RV or boat, but you also get the mortgage interest deduction too. Taxpayers need to be sure to shop around for the best interest rates and loans terms.”
Contact an Enrolled Agent for advice on how you can arrange for tax-deductible financing on your RV. Enrolled Agents are federally authorized tax practitioners who have technical expertise in the field of taxation and are empowered to represent taxpayers before all administrative levels of the IRS.
The National Association of Enrolled Agents is a non-profit membership organization dedicated to representing, promoting and enhancing the Enrolled Agent profession. Enrolled Agents are unique as the only group of tax practitioner specialists required to maintain their credentials through continuing education reported directly to the Internal Revenue Service. NAEA provides a national, toll-free, 24-hour EA Referral Service hotline, (800) 424-4339, for consumers seeking the services of an Enrolled Agent. NAEA's Web site includes tax news and information, answers to frequently asked tax questions, electronic bulletin boards and an online referral listing for the public.