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  • June 11, 2024

    Can a boat be a tax write-off? What about a captain’s license? How about fuel or dock fees?

    Boats are expensive, but you already knew that. It’s why you’re looking into ways to find a bit of relief.

    As far as boat purchases go, tax law varies too much by state to give a generalized answer on whether your boat qualifies as a write-off. Even having a captain’s license doesn’t guarantee you can write off a boat purchase. The only sure way to take advantage of any potential tax benefits is to talk with a tax professional in your state.

    Beyond the boat purchase itself, however, you can likely count on a few tax breaks associated with your captain’s license or commercial operation. Let’s take a look at some possibilities for you to bring up with your tax pro.

    Tax Benefits of a Captain’s License

    While a captain’s license doesn’t directly provide tax benefits, it can lead to tax deductions for boat owners in certain situations. 

    With a captain’s license, you can operate your boat commercially by offering services such as fishing charters or sailing charters. Engaging in commercial activities allows you to start writing off some of the costs associated with running your boat as business expenses. 

    Quote Card: Can I Write Off a Boat on My Taxes With a Captain’s License?

    You may qualify for deductions related to:

    • Boat depreciation
    • Dock fees
    • Fuel costs
    • General maintenance (including haul out, storage, etc.)
    • Insurance fees
    • Business costs like marketing, sales, and professional services

    Even if you don’t intend to use your license commercially, the Lifetime Learning Credit still applies if you take a qualifying course. Mariners Learning System is approved by the U.S. Coast Guard as an educational organization, which means the cost of the course can be written off on your taxes.

    Infographic: Can I Write Off a Boat on My Taxes With a Captain’s License?

    4 Ways a Boat Can Provide a Tax Write-Off

    Boat owners can claim tax benefits, deductions, or credits in several situations. Here are a few scenarios that go beyond the usual business expenses.

    Commercial Use Expenses

    Boat owners operating their vessels commercially can potentially qualify their boats as business assets, meaning expenses related to their operation and upkeep may be tax deductible. Aside from general expenses like fuel, maintenance, repairs, and financing, different commercial uses offer different deduction opportunities.

    Fishing charters, for example, open the door to deductions for fishing equipment — plus bait! Expenses for online fishing and weather reporting subscriptions, as well as membership fees for services like Sea Tow and BoatUS, may also qualify as deductible business investments.

    As a sailing instructor, you can write off more than your boating expenses. For instance, you might claim the cost of leasing classroom space or membership fees for groups such as US Sailing or the American Sailing Association. Once you add in other expenses like marketing, sales, and maintenance, you could be looking at a hefty deduction.

    Boat deliveries also have unique costs you can write off, such as transportation to and from the boat, food and lodging associated with the job, and special equipment required for the trip.

    Donation

    For people with a broken boat sitting on the side of their property, one way to get rid of an eyesore and reduce taxes at the same time is by donating it to a qualified charitable organization. Others might pass a cherished old sailboat on to their community when age or illness renders them unable to take it out.

    Whatever the condition of the boat you’re donating, the organization you choose will assess a fair market value for it at the time of donation, which you can then use as a deduction on your tax return. 

    Home Office

    Claiming your charter or sailing boat as a home office for your business is tricky, though sometimes doable. The easiest way to qualify for the home office deduction is to be a liveaboard captain. You also have to be very cautious and specific with how you make the claim.

    Again, consult a local tax professional on this one; you don’t want to provoke the IRS.

    Personal Property Tax

    The deductions or exemptions for personal property taxes on boats vary from state to state, but they may significantly reduce the annual tax burden for boat owners. Check the laws in your area (and talk with a professional) to find out your options.

    Maximize Tax Benefits for Your Boat

    The taxes associated with boats are different in every state, which is why it’s important to consult a tax professional every year to maximize your benefits. 

    Even if your boat itself can’t be a write-off, the biggest tax benefits for many come from deducting expenses for commercial opportunities — which require a captain’s license.

    If you’re interested in commercial boat operation but don’t yet have a captain’s license, take a look at Mariners’ courses. We’ve designed our USCG-approved online learning system to provide everything you need to know to succeed and nothing you don’t. Get started earning your captain’s license with Mariners today.

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