"John H" wrote in message
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On 31 May 2005 21:39:29 -0700, wrote:
Dan Krueger May 31, 8:06 pm show options
Newsgroups: rec.boats
From: Dan Krueger - Find messages by
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Date: Wed, 01 Jun 2005 00:06:33 GMT
Local: Tues,May 31 2005 8:06 pm
Subject: Boat Financing
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Peter,
Got a home with enough equity for the boat? If you do that's a great,
tax deductible source of money.
**********
Tilt. If the money is used to buy a boat, the interest will not usually
be deductible on a h.e. loan.
The money needs to be used for education, home improvements, or other
items on a short list of approved expenditures. Nothing stops a lot of
people from lying, of course- but they are liable for back taxes,
penalties, and interest when and if caught.
However, if you take out an actual boat loan the interest on that *may*
be deductible as a "second home" if the boat meets certain minimal
requirements for accommodations and you are not already writing off the
interest on a vacation cabin, motorhome, or etc under the "second home"
provision.
I would say, never, ever, ever, put your home at risk to pay for a toy.
Take out a loan using the car, boat, airplane, camp trailer, whatever
as collateral. If things go unexpectedly to hell, you may be able to
stiff the bank for the payment on the boat or vehicle. It will ruin
your credit, but if there isn't a huge "deficiency" judgment the lender
would have a hard time coming after your house.
When you borrow $400k on a $1mm house to buy a boat, the *entire* $1mm
asset is at risk.
Nobody has figured out how to repo just part of your house. Two years
later when the $400k boat is down to $250k and the $1mm house is up to
$1.2mm, the lender probably won't even have the decency to say "Thank
you very much!" as you sign the deed..
Good advice.
Yes...........but...............if the boat did not qualify as a second home
(needs sleeping, cooking and toilet or owner already has a second home) and
is less than $100,000, a home equity loan to purchase the boat would result
in tax deductible interest whereas a straight boat loan would not. Whether
that is worth the risk is up to individual circumstances. (someone in the
33-38% bracket might make it worthwhile)
--
John H
On the 'PocoLoco' out of Deale, MD
"Divide each difficulty into as many parts as is feasible and necessary to
resolve it."
Rene Descartes (A true binary thinker!)