Boaters to be Hit by Tax Reform

[NorthernFocus]

Last week our financial adviser sent us an email with a summary of the proposed changes to US tax law. The current House version being proposed eliminates the deduction for mortgage interest on a second home. In addition to the obvious impact on the real estate market I have to think that's bad news for the Boat and RV industries.

 

[sjreib]

Also don't forget the loss of the sales tax deduction. If you're thinking of buying a boat in the near future, a purchase before the end of 2017 may save you big bucks. We'll stay content with our C28.

 

[knotflying]

One needs to look at the entire tax change and the net impact, not necessarily one or two deductions removed. I am definitely not well versed in the changes, but the elimination of the AMT and increases in the standard deduction helps offset some of the eliminated deductions. Additionally, don't forget, the value of the deduction is directly related to your tax bracket. So at a 39% tax bracket you are only realizing 39% of the deductible expense. I really don't think that deductions on luxury items such as boats and RV's changes one's buying habits. It makes the tax seem more palatable. If the difference between the sales tax and or interest deduction financially makes a difference between buying or not buying, then you probably shouldn't be buying in the first place. I could never figure out why people thought a tax write off on a large mortgage was great. If you save 39% on $10,000 that is $3,900 deduction. You can save $6,100 if you didn't have the interest payment in the first place. Granted, if you have to pay the interest the deduction is a bonus. However, my philosophy is you never borrow money for a depreciating item. Then again my philosophy. 😀

 

[trailertrawlerkismet]

If said law passes with the deductions mentioned changed, there are still options remaining to deduct interest on your federal taxes from a boat purchase. By taking a conventional loan out on your primary home, getting a home equity loan or line of credit against your primary home you'd be able to deduct the interest. I'm not saying this is good or bad only that there would still be options for those that look forward to the deduction.

Jim F

 

[knotflying]

Jim, I think somewhere I saw that home equity loans are eliminated from deduct-ability as well. I think the only way around it is to refinance your home and take out as much as you can afford in a one shot refinance. A bit more expensive and cumbersome than a HELOC, but a work around. Hey, if it were me I wouldn't mind seeing all deductions eliminated and more standard tax rates where everyone pays, even if low income pays a very small expense. I think everyone needs skin in the game. Congress won't go for that because their only power to control behavior is by taxation. But, let us not digress from boating.
Remember to always check your zincs!! :lol:

 

[harry ames]

I rely heavily for my retirement revenue on what the markets are doing. IF the tax package goes through, stocks will do even better than the record setting past year. I'd much rather see my investments going up than have concern over relatively trivial things like tax deductibility on a second home etc. 2017 is the first year in several years that my end of year corpus has gone up after having taken almost 50 grand out.

My boat buying has always been for cash and possibly a very small loan. (Of course when I'm borrowing to buy a depreciating item like a boat or car or airplane or motor home, I should have my head examined. The interest deduction on the interest I pay on a small loan in the "second home" category is impossibly small.

So, bring on the tax reform bill. Yaaaahhooooo!

 

[rpmerrill]

Also, there was a bunch of talk about doubling the standard deduction. I think it is still in there.
If they do that, it would pretty much cover me and I would be doing standard deductions anyway.

 

[baz]

I don't like that the proposed tax program eliminates or limits the medical expense deduction. Also, not getting a deduction for sales tax I pay to my State bugs me. The sales tax for my new 2018 R-27/OB was around $15K.

I've read and listened to many about the new tax proposals and honestly do not like either. I hope they get defeated.

 

[Brian B]

I don't like that the proposed tax program eliminates or limits the medical expense deduction. Also, not getting a deduction for sales tax I pay to my State bugs me. The sales tax for my new 2018 R-27/OB was around $15K.

I've read and listened to many about the new tax proposals and honestly do not like either. I hope they get defeated.

If you live in Rhode Island you do not pay sales tax on new or used boats. We also do not pay any local or state property tax on boats. At the time of purchase any items associated with the boat that are included with the sale are also not taxed.

 

[rpmerrill]

John Kerry taught us that.

 

[baz]

If you live in Rhode Island you do not pay sales tax on new or used boats. We also do not pay any local or state property tax on boats. At the time of purchase any items associated with the boat that are included with the sale are also not taxed.

Do you have a State Income Tax in Rhode Island ?

 

[Brian B]

If you live in Rhode Island you do not pay sales tax on new or used boats. We also do not pay any local or state property tax on boats. At the time of purchase any items associated with the boat that are included with the sale are also not taxed.

Do you have a State Income Tax in Rhode Island ?

Yes

 

[scross]

Oregon has no sales tax on boats or anything not auto (0.5% for cars) and the initial and recurring boat (and auto) registration fees are stupidly low. Just don’t tell anyone in Salem I said that!
I’ve thought about renting one bedroom out to a whole bunch of folks and offering a mail forwarding service to “roommates” who aren’t around much. Heck, we use Our Journey in WA a lot but just never enough to legally require WA state registration.
And yes, property taxes and income taxes (9+%) here are substantial - just not as bad as in CA. Similar to WA I think.

 

[knotflying]

Well, I must have inadvertently hit the jackpot. I bought my boat before I retired while we were in Rhode Island, no sales tax. Then two years later moved to Florida, no income tax. If you own a boat out of state longer than a year and never paid a sales tax, when you go to Florida no issue with having to pay a sales tax.

 

[stwendl]

Some states will see if you ever paid sales tax and if not levy it against you he property. If they can’t then they have the one time “use tax” at their disposal and all that on top of annual property taxes.

If your boat or rv is below a certain value then they don’t bother with the annual property taxes. Apparently going after 10 owners of a 10k property is more work then going after one owner with a 100k property