Your boat or RV might be your second (tax) home

You may spend so much time in your boat or RV that it feels like a second home.  Did you know that the IRS might agree with you?  In fact, a boat or recreational vehicle can qualify for some of the tax breaks associated with a second home.  Specifically, interest you pay on a loan to purchase a boat or RV could be deductible as mortgage interest.

Normally, mortgage interest is deductible if it is for the purchase of a principal residence and one additional residence.  But the IRS defines a dwelling to include a boat, trailer, or mobile home — as long as it contains a kitchen, sleeping space, and toilet facilities.  So your boat or RV could qualify as a second home, and you could deduct the interest.  There's a cap of $1 million on the total amount of loans that qualify for the home mortgage interest deduction.

Finally, if your boat does qualify as a dwelling and you rent it out, you're eligible for the tax breaks that come with renting out a vacation home.