Home office tax deduction for liveaboards.

[Davidhoy]

I recently started living aboard my Catalina 470, currently in a marina in South Florida, but later further afield. I work from "home", and use part of my boat (mostly the nav station) as my "office". Can I take a deduction for part of the marina fees, utilities, and Internet connection? I know I can do this with a house, and hopefully it's no different now that my home is floating.

Ultimately I need to talk to a tax professional, but it helps to have a basic idea of what's possible, hence the question.

-David

[S/V Illusion]

Talking to a tax lawyer is the best idea but when last I did that, she said the space has to be used “exclusively” as work space. A nav station likely doesn’t pass the “laugh test” to an auditor.

She also warned (three years ago) that home office deductions are one of the first triggers for an audit.

[CarlF]

"In a 1994 tax court case, TC memo 1994-27, Dr. Salih was denied a home office deduction for failure to provide evidence that an office containing a television and a VCR had no personal use."

If you can't have a TV in your home office, I'd love to see the expression on the IRS auditors face when you show him your nav station.

https://www.thebalancesmb.com/how-ca...t-proof-398589

[Fore and Aft]

Could you call the yacht "Home Office" and deduct everything? LOL
Talk to your tax professional and see what he says. Anything business wise I always check with my accountant first. Much cheaper than having to pay the money back later.
Cheers

[skipmac]

I work from home and boat (although haven't tried to expense the boat yet) and my accountant also warned me that deducting for a home office is a trigger for audits. However she deducts the percentage of the house I use for work and I end up with about the same benefit.



I'm not exactly sure how she does it but we have been doing it for years with no problem. Maybe deducts the use of the house as a business expense instead of a home office. Ask your accountant.

[denverd0n]

Originally Posted by S/V Illusion

...the space has to be used “exclusively” as work space.

...home office deductions are one of the first triggers for an audit.

This ^^^

Talk to your tax advisor, but I strongly suspect that the advice you will get is, no, you cannot take any deduction for doing some work at your nav station.

[taxwizz]

Originally Posted by S/V Illusion

Talking to a tax lawyer is the best idea but when last I did that, she said the space has to be used “exclusively” as work space. A nav station likely doesn’t pass the “laugh test” to an auditor..

A tax lawyer will likely charge about 4 times as much as a CPA and not give any better advice at your level of complexity.
Just sayin'

[S/V Illusion]

Originally Posted by taxwizz

A tax lawyer will likely charge about 4 times as much as a CPA and not give any better advice at your level of complexity.
Just sayin'

this is a legal assessment, not an accounting one and my experience is the two are often mutually exclusive. No offense but accountants are accountants unfamiliar with tax code case law.

[taxwizz]

Originally Posted by S/V Illusion

this is a legal assessment, not an accounting one and my experience is the two are often mutually exclusive. No offense but accountants are accountants unfamiliar with tax code case law.

I disagree. Any CPA in a tax practise takes several Professional Development courses each year and is well aware of tax and audit issues and laws. We are required by our professional associations to keep up to date.

(I am a CA, CPA in Canada, but assume that the requirements are similar in the USA and elsewhere)

[Davidhoy]

Thanks for all the opinions. As I said upfront, I fully intend to get professional advice, so all the suggestions to do that were moot. It's hard to dedicate any particular space to just one activity on a boat, and it sounds like the IRS can be pretty anal.

For the curious, attached is a picture of my nav station/home office...

[S/V Illusion]

As the max allowable deduction is $5/sq ft, I’m not sure how large your nav station is but I suspect we’re discussing the price of dinner at a restaurant.

[taxwizz]

Originally Posted by Davidhoy

Thanks for all the opinions. it sounds like the IRS can be pretty anal.

Some people even think that they are paid by commission.

[sailorboy1]

I see no way to convince anyone that the space on a boat you use to "work" isn't also used for something else. If you tried you better be ready for "The Letter".

[Davidhoy]

Originally Posted by S/V Illusion

As the max allowable deduction is $5/sq ft, I’m not sure how large your nav station is but I suspect we’re discussing the price of dinner at a restaurant.

Quote of the day!

[jeffjd]

Originally Posted by S/V Illusion

As the max allowable deduction is $5/sq ft, I’m not sure how large your nav station is but I suspect we’re discussing the price of dinner at a restaurant.

The thread is dead, but it was a nice distraction from my tax season... FYI the $5 per sq ft is a safe harbor calculation, so you can deduct more if the actual costs are more.

To the OP... there is plenty of case law that does not support a deduction, so I would not prepare your return with a office deduction that includes an allocation of your boat ownership cost. I am sure you could get a lot of CPA’s to prepare your tax returns with a deduction... but it would very aggressive and if under audit you will have a hard time defending the position.

Btw - most the business deduction for boats under charter are BS also..... unless you actually plan on making a profit 3 out of every 5 years. This isn’t to say you won’t get away with it.