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Boat Forum / Cruising / February 2005Can a boat sale loss be deducted?
I'm fishing for tax deductions. Can the loss from the sale of a boat used as a second home legally be deducted on federal income taxes? Just wondering? Ed > I'm fishing for tax deductions. Can the loss from the sale of a boat used > as a second home legally be deducted on federal income taxes? Just > wondering? > > Ed Not a tax man, and don't even play one on TV. However, in a tax environment where, if you live in it for the last two years, you can escape any tax on the gain on your home, I doubt you could take a loss. If it were investment property, properly documented, depreciated, and reported as such all along the way, if your sale price returned less than the adjusted basis (due to the depreciation taken before), you'd have grounds for a loss. L8R Skip, getting out of the investment property business  SignatureMorgan 461 #2 SV Flying Pig http://tinyurl.com/384p2 "Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." - Mark Twain Ed, You can always ask the IRS if they would disallow your intended deduction. I'm thinking their position would be that you received the value as deferred maintanence, and as such no loss exists. I'm fishing for deductions too, but only bullet-proof ones. Best of luck. Bob > I'm fishing for tax deductions. Can the loss from the sale of a boat used > as a second home legally be deducted on federal income taxes? Just > wondering? > > Ed You can under the same conditions you would for a house. IOW, you cannot claim a loss for a home if it was solely used as a house. If you used a portion of the boat as a business, either as an office, or as a charter, etc, then the portion of the boat that was used as a home office would be capable of being claimed as a loss. IE, $100,000 boat, with 20% being used as a home office sold for 50,000. The sale is then considered to be two sales, a sale of a home office and a sale of a regular house. The home office depreciated, so it was worth 20,000 (20% of the original 100k). It dropped in value by half, so you can report 10,000 as an ordinary loss to the IRS. The main reason for this is the IRS is trying to get taxes from people who's home office appreciate, so the rules were setup to seperate out a home office from a regular house and then nail people for the appreciation in value of the portion of the home that was their home office. If you haven't been doing something like this though throughout time you had your boat (ie claiming a portion of it as a business or home office), then you also can't deduct. Doug |
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