Boating anyone? Winter hibernation has finally come to an end. Now come thoughts of summer on the water: sailing, fishing and cruising on a sunny day. A new boat? Perhaps an upgrade to a yacht? Of course you want the best financing terms available, the least amount of outlay, and very little headache. Fortunately, boat loans are more easily obtainable than mortgaging a real estate property. Typically, lenders will offer financing up to 85% of the total selling price of the boat with terms as long as 20 years. All loans are simple interest (interest only payments) with no points or prepayment penalties. There are no application fees, nor are there any other costs associated with this financing. The only other fee collected by the agent at closing would be the cost of Coast Guard Documentation (if applicable) or State Titling fees. Pre-approval can even be acquired 24 to 48 hours beforehand, thus enabling you to lock in an interest rate, find your credit/loan limits and deal with any unknown credit issues prior to contract. Most importantly, any finance anxiety will be eliminated as you negotiate the best price for your new vessel. Your yacht may even qualify for the same IRS tax advantages available for your new home, like deductible mortgage interest. Under IRC section 163(h)(2), a taxpayer may deduct any qualified interest on a qualified residence and one other residence owned by the taxpayer for purpose of deductibility for the tax year. A boat will be considered a qualified residence, if it is one of the two residences chosen by the taxpayer for purposes of deductibility, as long as it provides basic living accommodations such as sleeping space (berth), a toilet (head) and cooking facilities (galley). If you were considering using a home equity line of credit for your purchase, you should be aware that home mortgage interest deduction is limited up to $100,000.00. Therefore, if your prospective vessel costs in excess of $100,000.00, separate financing appears to be advantageous, as it allows for greater interest deductibility. The only documentation required for a yacht loan includes: two years of income tax returns, if self employed, business financial statements, two years corporate returns and your Boat Purchase Agreement. Whether you’re purchasing a daysailer, fishing boat or mega-yacht, the above information should get you “under way.” During this month there are two notable boat shows you may want to consider: The Bay Bridge Boat Show, Kent Island, MD, May 2nd to 5th and the Spring Boat Show, St. Petersburg, FL, May 17th to 19th. Happy Boating! For more information or recommendations please contact me at Beechwood Capital Company LLC., 500 N. Broadway, Jericho, NY 11753. For those who prefer calling, my number is (516)-935-5600. Back |
