Yes, you can deduct the cost of a boat under Section 179 if it is used for business purposes. The maximum deduction is $1 million. Boats must be used more than 50% for business to qualify. Section 179 allows you to deduct the full purchase price in the first year rather than depreciating it over time. This can help offset income and reduce taxes owed. Section 179 applies to new or used boats and equipment added to boats. So items like electronics, fishing gear for charter boats, maintenance equipment, etc. may also qualify for deduction. With proper documentation and usage requirements, Section 179 can make boat ownership more affordable.
You can either take a big deduction upfront or amortize over the 5 years. It works out roughly the same but a 50% offset from revenue and tax advantages is possible. Section 179 allows businesses to deduct any dollar amount within thresholds and allocate to assets as wanted. This offers a chance to pick which assets and amounts to cover or save.
Vehicles can qualify for Section 179 if a business uses them 50% or more for business. An app like Mile IQ can accurately prove this by tracking miles. For 2021 the maximum Section 179 deduction is $1,040,000, reduced dollar-for-dollar over $2 million in spending. It’s limited to taxable income from an active trade or business. Section 179 does not apply to personal property converted to business use.
Bonus Depreciation is taken after Section 179. It applies to more spending so is useful to large businesses. Net loss businesses can carry it forward. Unlike Section 179, Bonus Depreciation is all or nothing for assets with the same lifespan. The two can combine on the same asset to optimize taxes when buying vehicles.
Limits are $1 million maximum deduction and phase out over $2.59 million in spending. Qualifying property is tangible, like furniture and equipment. After Section 179, remaining depreciation can be spread over the asset’s life. When sold, profit over the depreciated price is a capital gain. If written down to nothing, full sale price is gain.