Your boat may qualify for the same IRS tax advantages that are available for your home. And by financing your purchase, instead of liquidating assets or paying cash, you increase your financial flexibility. This enables you to take advantage of attractive new investment opportunities as they come along…and the earnings from these investments can easily exceed the cost of your marine financing. In the end, your boat may cost less by not paying cash.
Under IRC section 163(h)(2) a taxpayer may deduct any qualified residence, which is defined as a principal residence and one other residence owned by the taxpayer for purpose of deductibility for the tax year. IRC section 163(h)(3) defines qualified residence interest as any interest, which is paid or accrued during the tax year on acquisition or home equity indebtedness with respect to any qualified residence of the taxpayer.
In accordance with IRC section (h)(4), a boat will be considered a qualified residence if it is one of the two residence chosen by the taxpayer for purposes of deductibility in the tax year as long as it provides basic living accommodations such as sleeping space (berth), a toilet (head), and cooking facilities (galley).
A lender who specializes in boat loans will normally be your best source for financing your new vessel as they understand boats and are familiar with all the paperwork and documents involved. Most boat loan lenders will do a pre-approval for you which will give you the budget parameters within which you can work. This should increase your negotiating position with the dealer or seller.
The loan approval process will normally take from 24-48 hours. Loan approvals are usually good for 30-45 days from the date of approval by the lender. The standard terms for a boat financing loan are 15 years for boat loans of $25,000 and above, with a 20 year term being available with most lenders at $100,000 and above. Down payments range from 15% - 20%.
Our general feeling is that a shorter term has many advantages. However there are a number of individual issues that should be considered. Basically, a shorter term loan will build up your equity in the boat quicker. Down the road this translates into more money in your pocket when it’s time to sell. Also, a shorter term can possibly get you a lower rate.
Simply complete one of our applications and send it along with your income information and within 1-2 business days you will have a WRITTEN credit decision. Or you can call one of our offices and we will personally take your application over the phone and answer any questions you might have.