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Tax Talk with George Saenz

Ask the tax adviser

The tax definition of a second home

Dear Tax Talk:
Is a 34-foot boat with a galley and bathroom considered a second home tax-wise?
Kathie

Dear Kathie:
If I told you your boat with the galley and bathroom is a second home what does this mean to you?

For tax purposes, the interest paid on a second home is tax-deductible. For most folks, this means that their homes in the mountains become a tax write-off. However, the Internal Revenue Service understands that some folks have nontraditional second homes.

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The IRS has expanded the meaning of a second home to include boats and motor homes. To qualify as a second home, the boat or motor home must be livable. The IRS interprets this to mean that if there is a bathroom and cooking facilities, you can live aboard.

Therefore, if your boat is financed, the interest that you are paying can be claimed as additional home mortgage interest on Schedule A.

-- Posted: March 13, 2003

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See Also
Tax advantages of homeownership
Tax breaks on second homes

New rules on residence sale tax exclusions

Tax glossary
More tax adviser stories
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