Boat financing

[tbyrne]

Just curious, what length of time do most people finance a boat for ?

Lets say a $50,000 boat, what are normal terms these days ?

Also, at what point does a boat qualify as a second residence? Is there an advantage to that ?

Thanks

 

[NOTHING ELSE MATTERS]

For second residence you have to have sleeping quarters, a head, fresh water and a stove or permanent mounted grill, i don't know if microwave qualifies. The advantage is you can claim the interest same way you do for your house.

 

[timberxx]

My loan is 48 months at 5.25

 

[megabytes]

The law is very vague but here it is straight from the horse's ass..oops I mean mouth.

Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

 

[tbyrne]

baot financing

So, do you count your Marlin as a second Home ?

I would think you could based on the legal statement.

I would think this makes it easier to swallow financing the expense.

 

[Fishermanbb]

It must be at least 22 feet, and have sleeping, cooking and toilet facilities. A microwave counts.

 

[LUNDINROOF]

The easiest thing to do is to get a home equity loan and use the proceeds to buy the boat. The home is the security for the loan, not the boat and all interest on a home loan is deductable.

The problem comes when you try to convince your wife that securing your boat with her “nest” is “good business”. Good Luck!

 

[tbyrne]

Financing

Thanks

Man, you hit the nail on the head with how to convince your wife.

My larger purchase might be down the road a bit, but, never hurts to prepare.

I am trying to assess the whole package, storage etc so I can budget it into the retirement plan someday.

 

[megabytes]

Re: baot financing

So, do you count your Marlin as a second Home ?

I would think you could based on the legal statement.

I would think this makes it easier to swallow financing the expense.

I did until we upgraded our second home from a townhouse to a patio home. It now has the highest interest so we deduct it instead of the boat.
Too bad can't pick the two highest as our main home is a distant third.

BTW: The except I posted is from the IRS website. That IS the law as written. Claim away and just make sure you can defend based on that criteria. A sleeping bag for example could be ruled not part of the boat. OTOH if your cooking facilities are attached then that meets the letter of the law.

All GW with a head, stove/microwave/berths meet this test. And BTW there is a popular misconception you must spend so many nights aboard. That is not true as clearly specified in the IRS docs. That rule has been confused with a second home in which you also rent.

 

[stella_ray]

The easiest thing to do is to get a home equity loan and use the proceeds to buy the boat. The home is the security for the loan, not the boat and all interest on a home loan is deductable.

The problem comes when you try to convince your wife that securing your boat with her “nest” is “good business”. Good Luck!

Yes, I agree with you or maybe after you take your first mortgage you can use it for buying a boat. It depends on you how to use your first mortgage for your purpose.

 

[Mustang65fbk]

Yes, I agree with you or maybe after you take your first mortgage you can use it for buying a boat. It depends on you how to use your first mortgage for your purpose.

This thread is almost 12 years old. I’m hoping that they figured out their loan/finances/questions in that time haha

 

[Fishtales]

Never financed a boat. Will only pay cash for toys (cars, boat or bike).

 

[Mustang65fbk]

Never financed a boat. Will only pay cash for toys (cars, boat or bike).

I've financed my previous boats as well as my current one. I bought my very first boat in my late 20's after just having purchased my house, so I didn't have a ton of money laying around after closing costs, money down, paying for inspections and so on. Now at 35 years old and not married with a single income, I had the money to buy my current boat outright but with my interest rate being so low I figured it would cost an extra $2k total over the 8 year loan, or however long it is. I figured keeping my money in the bank for a rainy day or whatever else I might need it for was worth the slight inconvenience and low interest amount.

 

[Fishtales]

I hear ya. If I was to borrow and retain cash, I'd invest in the stock market (well diversified low cost Index or ETFs). I feel you have to be making at least 8% pretax today to stay ahead. The market is a longer term play as you have to commit to being in the market 3 years to ride out any bear dips. Not the place if you need the money short term a money market fund may be better.

When younger I didn't feel comfortable with debt beyond the mortgage with a wife at home and four birdies to look after. Once we paid it and other debt off, I took another mortgage to built the beach house and then worked to pay it off. In parallel to paying down debt, we invested initially with advisors and then self directed the last 10 years (both retirement and post tax accounts). My yearly average return for the last 10 years is 12.5% with a couple of down years and some home run years sprinkled in using the above strategy. I preach to my kids and any young adult who will listen the amazing power of compounding coupled with minimal fees.

I value the feeling and freedom of being debt free but understand the zero debt approach is not for everyone. You have look at every spend through the value lens and keep instant gratification spending in check. I could have probably made way more money if I leveraged up and invested but that is outside my comfort zone.