Test
Personal use property – not a primary or second home
You already have two residences with mortgage interest which exceeds the interest on the boat mortgage.
Primary or second personal residence
Used as a residence, no rental use.
Rented Dwelling Unit-De Minimis Rental Use
Rental use of fewer than 15 days per year.
Rented Dwelling Unit Personal Residence (“vacation home’)
Personal use more than 14 days or 10% of total days rented at fair rental price.
Rented Dwelling Unit Personal Residence – First or Second Home
Same as above, but you do not have two other homes with higher mortgage interest.
Rented Dwelling Unit – Not a Personal Residence
Personal use not more than 14 days or 10% of total days rented at fair rental price.
Rental Activity
Average rental period is more than 7 days or more than 30 days if you provide significant personal services with the rentals.
Entertainment Facility Personal Use
Cost of activity is generally considered to constitute entertainment, amusement, or recreation, no substantial and bona fide business discussion or primarily for the benefit of highly compensated employees.
Entertainment Facility Business Use
Cost of activity generally considered to constitute entertainment, amusement, or recreation, substantial and bona fide business discussion or no substantial and bona fide business discussion and primarily for the benefit of non-highly compensated employees.
Hobby Loss
No profit motive under Reg. Sec. 1.183-2(b)(1).
Trade or Business
Taxpayer establishes profit motive under Reg. Sec. 1.183-2(b)(1).
Property Used Predominantly Outside the U.S.
Property used more days outside the U.S. than inside the U.S.
Tax Treatment
Personal use property – not a primary or second home
No deductions except for property taxes, deductible as an itemized deduction.
Primary or second personal residence
Mortgage interest and property taxes are deductible as itemized deductions.
Rented Dwelling Unit-De Minimis Rental Use
No reporting of receipts or expenses is required.
Rented Dwelling Unit Personal Residence (“vacation home’)
Allocate expenses between personal and rental use. If allocated expenses exceed rental receipts, not deductible as a rental loss, but can be carried forward to the next tax year. No depreciation is allowed.
Rented Dwelling Unit Personal Residence – First or Second Home
Same as a personal residence, except mortgage interest is deductible as an itemized deduction.
Rented Dwelling Unit – Not a Personal Residence
Allocate expenses between personal and rental use. If allocated expenses exceed rental receipts, may be deductible as a rental loss (see rental activity, below). Depreciation allowed.
Rental Activity
Expenses are only deductible to the extent they do not exceed rental revenue. If tangible personal property (not real property), report income on Form 1040, line 21, and losses on line 36.
Entertainment Facility Personal Use
No deductions are allowed under Section 274.
Entertainment Facility Business Use
Deductions allowed under Section 274.
Hobby Loss
Expenses only deductible to the extent they do not exceed rental revenue. IRS has taken the position expenses are considered miscellaneous itemized deductions subject to the 2% “haircut.”
Trade or Business
Losses are deductible as business losses on Schedule C.
Property Used Predominantly Outside the U.S.
Losses are deductible as business losses on Schedule C. Section 179 and accelerated depreciation is only allowed if “documented vessel engaged in foreign or domestic commerce.”
Personal use property – not a primary or second home.

Test: You already have two residences with mortgage interest which exceeds the interest on the boat mortgage.

Tax Treatment: No deductions except for property taxes, deductible as an itemized deduction.

Primary or second personal residence

Test: Used as a residence, no rental use.

Treatment: Mortgage interest and property taxes are deductible as itemized deductions.

Rented Dwelling Unit - De Minimis Rental Use

Test: Rental use of less than 15 days per year.

Treatment: No reporting of receipts or expenses required.

Rented Dwelling Unit Personal Residence (“vacation home’)

Test: Personal use more than 14 days or 10% of total days rented at fair rental price.

Treatment: Allocate expenses between personal and rental use. If allocated expenses exceed rental receipts, not deductible as a rental loss, but can be carried forward to the next tax year. No depreciation is allowed.

Rented Dwelling Unit Personal Residence – First or Second Home

Test: Same as above, but you do not have two other homes with higher mortgage interest.

Treatment: Same as personal residence, except mortgage interest is deductible as an itemized deduction.

Rented Dwelling Unit – Not a Personal Residence.

Test: Personal use not more than 14 days or 10% of total days rented at fair rental price.

Treatment: Allocate expenses between personal and rental use. If allocated expenses exceed rental receipts, may be deductible as a rental loss (see rental activity, below).
Depreciation allowed.

Rental Activity

Test: Average rental period is more than 7 days or more than 30 days if you provide significant personal services with the rentals

Treatment: Expenses are only deductible to the extent they do not exceed rental revenue. If tangible personal property (not real property), report income on Form 1040, line 21, and losses on line 36.

Entertainment Facility Personal Use

Test: Cost of activity generally
considered to constitute entertainment, amusement, or recreation, no substantial and bona fide business discussion or primarily for the benefit of highly compensated employees.

Treatment: No deductions allowed under Section 274

Entertainment Facility Business Use

Test: Cost of activity generally considered to constitute entertainment, amusement, or recreation, substantial and bona fide business discussion or no substantial and bona fide business discussion and primarily for the benefit of non-highly compensated employees.

Treatment: Deductions allowed under Section 274.

Hobby Loss

Test: No profit motive under Reg. Sec. 1.183-2(b)(1).

Treatment: Expenses are only deductible to the extent they do not exceed rental revenue. IRS has taken the position expenses are considered miscellaneous itemized deductions subject to the 2% “haircut.”

Trade or Business

Test: Taxpayer establishes profit motive under Reg. Sec. 1.183-2(b)(1).

Treatment: Losses are deductible as business losses on Schedule C.

Property Used Predominantly Outside the U.S.

Test: Property used more days outside the U.S. than inside the U.S.

Treatment: Losses are deductible as business losses on Schedule C. Section 179 and accelerated depreciation is only allowed if a “documented vessel engaged in foreign or domestic commerce.”