BoatBanter.com - View Single Post

wrote:
I see no reason why second home loans or boat loans should be
deductible on income tax. This is simply a subsidy for the rich. Now
that I have made myself so popular here, what do y'all think?

Being in OZ probably I shouldn't comment but agree it does seem a bit
odd. Certainly hard to justify on the grounds of taxation being for the
general well being of society in general & certainly seems open to
exploitation.

Here you can only claim a deduction on anything if the claim is directly
related to generating taxable income. That mostly rules out a domestic
home or a second not rented out holiday house or a pleasure boat etc,
regardless of it's fittings. A boat used to create "taxable" income is
fully claimable, however it needs to be in survey with the relevant
marine board or classification society.

Even then the claimant needs to show that the "business" will eventually
lead to some "taxable" income. How long a lead time depends on the
venture but a boat would need to be viable PDQ if you didn't want a tax
audit. Rental boats have been the subject of close scrutiny for some
years now, where the "investor" buys the boat but another manages to
asset for them.

Here "investment" properties are treated as a business so inputs are
deductible especially the interest on the capital. This has been the
main driver behind every man & his dog having a negatively geared rental
property & the inevitable glut of new ones being built. The crunch when
if comes will not be pretty, I've seen 3 over my life:-)

K