Bass Fishin Tax Info

[DJD]

I hope the Moderators let this stay here for a while so i could get a reply. I wanted to take a home equity loan out to buy a bassboat instead of a conventional loan for the interest write off. Can the Accountants on here tell me their opinion on this? Thanks.

[MsgMills]

Great idea, can then claim the interest on your income taxes, vs not being able to claim loan interest from a standard interest loan....

Yes, great idea, that is how I bought mine, prior to paying it off....

[Fishin_4_Fun]

As long as you don't mind putting your house up for collateral. If you have a loan default though, you would have to live in your boat, while your house was being sold.

[td176]

Thats how I bought mine

[bigrod]

Sure is a good way to write the interest off on your taxes, BUT remember you are buying a boat on what I assume you have is a 30 year loan and what do you think your boat will look like in 30 years?

[DJD]

There seems to be two types of loans, the HELOC and i understand that the other is a term loan that is set at a fixed rate. Are both tax deductible? I want to do this but would like to know for sure that both loans can have the interest as a write off. A man could get a nice boat. I was thinking a good chunk down and maybe a 10 year loan? Any further info is greatly appreciated.

[biggw]

There seems to be two types of loans, the HELOC and i understand that the other is a term loan that is set at a fixed rate. Are both tax deductible? I want to do this but would like to know for sure that both loans can have the interest as a write off. A man could get a nice boat. I was thinking a good chunk down and maybe a 10 year loan? Any further info is greatly appreciated.

Wow Don you must be thinking of getting a pretty nice boat there man--gl to you buddy---

[RoadToad]

I hope the Moderators let this stay here for a while so i could get a reply. I wanted to take a home equity loan out to buy a bassboat instead of a conventional loan for the interest write off. Can the Accountants on here tell me their opinion on this? Thanks.

What are the time frames involved in the two loans? I don't know anything about the typical loan on a bass boat, but if it's 3-5 years or so like an auto loan, versus 20 years or more on the home equity loan, then while writing off the interest sure sounds great, in the long run, the only way you'll save money with the home equity loan is to make extra payments and pay it off early. If you're not sure you can do that, then the extra interest you end up paying due to the longer term of the loan can, and usually will, be more than the tax savings. In the end, ya gotta crunch the numbers. I would start by comparing the total amount of interest you'll end up paying on each loan if you only make the minimum payment each month, and go from there. Call around to different loan brokers, ask each of them to do the math for you, and compare the results. They should be happy to help you crunch those numbers.

[DJD]

What are the time frames involved in the two loans? I don't know anything about the typical loan on a bass boat, but if it's 3-5 years or so like an auto loan, versus 20 years or more on the home equity loan, then while writing off the interest sure sounds great, in the long run, the only way you'll save money with the home equity loan is to make extra payments and pay it off early. If you're not sure you can do that, then the extra interest you end up paying due to the longer term of the loan can, and usually will, be more than the tax savings. In the end, ya gotta crunch the numbers. I would start by comparing the total amount of interest you'll end up paying on each loan if you only make the minimum payment each month, and go from there. Call around to different loan brokers, ask each of them to do the math for you, and compare the results. They should be happy to help you crunch those numbers.

Absolutly, i have been doing that and it is important information. One thing i have found is that the different Banks and Mortagage Companies have different views on good rates or conditions, things like annual fees and closing costs. I'm leaning toward the CHELOC (Choice equity line of credit?) with money down and a 10 year term. I wanted a low payment so if i hit tight times (Christmas) i can do the minimum other than that double up and hit it hard. Pre payment fees don't exist in the loan i'm looking at either. Thanks for the info guys..

[Lowerider]

DJD

You can go with a HELOC or a one time pop you can pay off at a term of say five years. The HELOC is really an open account you can take draws on and is mainly used for on-going construction improvements or paying on a wedding etc. The better option is to get a basic equity loan which is a one-time pop which is generally paid off over 5 years. Your rates will be determined based on your LTV (how much equity you have in your home). Given prime is relatively high right now you won't be able to get a great rate no matter which direction you go. As far as the tax deduction, yes you can write off the interest on either type of loan given you are not in AMT. Equity interest not used for home improvements has to be added back for AMT purposes so check with your tax advisor.

[DJD]

Lowerider,
Thanks for the info! What is AMT?