Getting a boat loan is considered to be a consumer loan. And with consumer loans, typically the interest you pay is not deductible on your income tax return.
But if you own a house, you can apply for a home equity loan. The amount a lending institution will give you depends on the difference between the value of your house and what you owe on it.
Now, depending on your situation, interest on a home equity loan may be fully deductible under the current law. (Individual circumstances may vary so may wish to consult a tax advisor).
Here are some of the advantages of a home equity loan versus a consumer boat loan.
1) Lower interest rates. In general, home equity loans charge lower interest rates than credit cards and personal loans.
2) More cash availability. Generally, by using your house as collateral, you can borrow more than with other types of loans.
3) More flexible repayment terms. Payment terms can be set to more properly match your paying ability.
4) Tax deductibility. Consumer loan interest deductions were eliminated after 1990. Depending on your situation, interest on your home equity loan may be fully deductible.
So check out a home equity loan to buy your boat instead of looking to get a consumer boat loan. And happy sailing.
