US Tax benefits for having a boat in charter

[belizesailor]

Originally Posted by 01kiwijohn

The Hobby vs Business determination has always been the determining issue.

+1. Hobby expenses have never been deductible.

[Belezar]

As a retired CPA, this thread is good comedy for the most part. Those who say talk to your CPA are pretty much the only ones with good advice. A few items - passive income limitations are important so unless you have lots of passive income, you will miss the majority of the deferral. Not many folks have 100s of thousands of passive income. These plans make more sense for the working wealthy, who take the weeks allotted to the boat for “free” sailing. And while everything has to work just right, you might be able to get 17% return. This could be true and the boat companies would not do it because they take the risk of ownership, which includes how the boat depreciates in real life, the rental risk, and the ability to offset taxes, plus they have to have the capital to invest. Since they don’t, it’s safer for them to let a charterer finance the boat and take those risks. You win if you use your weeks, have the right tax situation, the boat is maintained well and the market is good when you get out. They don’t lose.

[Montanan]

Originally Posted by Belezar

As a retired CPA, this thread is good comedy for the most part. Those who say talk to your CPA are pretty much the only ones with good advice. A few items - passive income limitations are important so unless you have lots of passive income, you will miss the majority of the deferral. Not many folks have 100s of thousands of passive income. These plans make more sense for the working wealthy, who take the weeks allotted to the boat for “free” sailing. And while everything has to work just right, you might be able to get 17% return. This could be true and the boat companies would not do it because they take the risk of ownership, which includes how the boat depreciates in real life, the rental risk, and the ability to offset taxes, plus they have to have the capital to invest. Since they don’t, it’s safer for them to let a charterer finance the boat and take those risks. You win if you use your weeks, have the right tax situation, the boat is maintained well and the market is good when you get out. They don’t lose.

Excellent point Belezar, the charterers definitely derive the risk reduction benefits of not owning the boats and as you state the potential benefit to the owner is very much specific to their tax situation and tax jurisdiction(s) of the owner.