WASHINGTON (LOG NEWS SERVICE) — President Obama has signed into law H.R. 5771 (Tax Increase Prevention Act 2014) that retroactively extended over 50 tax provisions including two that affect boaters — the state sales tax and mortgage interest deductions — until Dec. 31, 2014.
The legislation, which was introduced by former Rep. Dave Camp (R-Mich.) in December, extended the provisions of the Mortgage Forgiveness Debt Relief Act of 2007, which has been extended by Congress several times since its original enactment but had expired Dec. 31. It must be renewed by Congress again if the tax deductions are to be available on 2015 federal tax returns.
The sales tax provision of the act continues to offer a federal tax deduction for state sales taxes. Boat owners must choose either the state sales tax deduction or state income tax deduction on their federal tax return.
A home, according to the IRS, must be a “qualified home” in order to qualify for the mortgage interest deduction.
IRS Publication 936 (Home Mortgage Interest Deduction for Use in Preparing 2014 Returns) includes the following definition of a qualified home:
“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.”
In a release, BoatUS said that during federal budget negotiations last year some in Congress sought to eliminate the deduction for boat owners, while keeping it in place for other “qualified home” owners. BoatUS said it had advocated for a more equitable “all or nothing” approach when applying the deduction and boaters did not get unfairly singled out.
BoatUS warned that some boat owners may be unaware that they are eligible for the home mortgage interest deduction, because not all lending institutions send borrowers an IRS Form 1098 for boat loans. Not receiving the form does not preclude taking the deduction. BoatUS said that boat owners who have not received this form should contact their lender for the amount of interest they paid in 2014, and enter it on line 11 on Schedule A (Form 1040) along with the lenders name, tax ID number and address.
Boat owners can go to www.IRS.gov and download Publication 936 for more details on the mortgage deduction and the 2014 Instructions for Schedule A (1040) for state sales tax deduction information.
Many of the lawmakers who voted to pass the bill agreed that while extending the tax breaks another year is a step in the right direction, a more permanent solution is needed to allow taxpayers to make long-range plans.