When Congress adjourned for 2007, members left in place two federal income tax deductions of potential benefit to boat owners, according to the Boat Owners Association of the United States.

A boat is treated like a second home for federal tax purposes if it has a galley, a head and sleeping berth. Mortgage interest paid on the loan is deductible from federal income taxes. Taxpayers may use the mortgage interest deduction for one primary home and one second home and must itemize deductions on their returns.

The other tax benefit is a deduction for state sales taxes. However, this may no longer be available after the 2007 tax year if Congress does not act to extend it. This deduction may be appropriate for boaters who paid substantial sales tax on the purchase of a new or used vessel last year. Boaters must choose either the state sales tax deduction or state income tax deduction on their federal tax return, but not both.

For those who fall under the Alternative Minimum Tax, most deductions are unavailable as taxes are calculated differently.

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