Done! I highly recommend it. As of 2014, all my boat’s expenses are legitimately tax deductible. The process was long but, for boat enthusiasts, it’s enjoyable.
Could you benefit from this? “Going corporate” worked for me for four reasons:
A. I have an old, but seaworthy blue water cruising sailboat.
B. I’m not rich. Whether walking the docks or the isles of West Marine, I’m frequently reminded that most yachtsmen live beyond my means. When sailboats stopped delivering passengers and mail, sailing in America became a privilege for the privileged. For me, every discount is greatly appreciated so making this year’s dock fees tax deductible was motivating.
C. Sailing provides a growth path. Living aboard a 1981 used sailboat inspired me to study and practice: Electricity, wood, fiberglass, engines, and plumbing. Boating instilled the courage to attempt repairs before hiring experts and to disassemble broken things before tossing. Such learning felt more like exploring and is exciting. Having an eagerness to learn, serves me well on the path towards professional sailing.
D. My real job. Working for a large conglomerate involves knowing that layoffs are often pending. Preparing “plan B” eases that worry. It also feeds a longstanding vision of retiring (in my sixties) and teaching Sailing.
Turning Your Sailboat Into a Business and Make Cruising More Affordable
These steps outline my meandering path- You can plan faster routes
1. Purchase a seaworthy sailboat (more about that later)
2. Obtain a Captain’s License
I found a school online, paid the money, attended class, and passed the Coast Guard test. For me, this was the only way. The schools teach you to pass the exam. This sounds obvious but often higher education uses class time to engage students in theoretical discussions. This leaves the “passing exam” task to students and their books. My school had a select range of the USCG’s questions to administer and they taught us to answer them. The course was around $1,000 and a significant time investment. However, I enjoyed the learning. Unlike school, this was not a chore. The other option is to self study and challenge the USCG proctored exam. This was not realistic for me.
After passing the exam, I started the hoop jumping, red tape cutting, and bureaucratic back & forth required when working with the Coastguard. If you’re patient and follow the process, eventually you’ll receive a certificate (now a passport like booklet) that you can fax to your insurance company for your first payback. For me, this was a few hundred dollars off of my annual insurance bill.
As a certified captain consider also these options for supplemental income.
- Provide sunset cruises – Check with your insurance company.
- Teach sailing
- Lease your boat to a local school.
About four years after earning my license, I finally contacted a local sailing school and, after flashing my USCG license and passing a sailing interview, I started providing the occasional weekend sailing charters. This was tremendously satisfying- a passion turned profitable… Well, the boat costs more than the occasional charter earns, but it still feels good to see dollars flow back the other way.
3. Establish a Business
The new income prompted me to register a company with the state. A Limited liability company (LLC) does two things:
- Lowers Taxes: The boats’ expenses become business expenses and are deductible from our house hold’s income.
- Secondly a boat related lawsuit could only result in loss of the LLC’s assets so, our land home is safe.
I also opened a business account at a local bank with a credit/debit card to help track income and expenses. For cash purchases I save receipts and plan to count them with a good cabernet next tax season.
Please Note:
- The IRS will be checking: I know a sailing Instructor that filed his boating “Losses” against his income three consecutive years and on the fourth year, he was investigated. The business has to be real. Fortunately for him, it was (and is)
- When gazing at new “nice-to-have” boat devices especially electronics, the seductive thought that “It’s tax deductible” can warrant some pretty bad decisions.
4. Instructor Certification
My chartering work was for an organization called Windward Sailing – which also has an excellent school and talented sailing instructors. They use the American Sailing Association’s (ASA) curriculum and credentialing process. It was a natural next step to start accumulating instructor certifications. I’ll be 65 someday and will to retire ready to teach ASA classes.
Instructor certification costs nearly $1,000. However, once paid, the classroom and sailing experiences were exciting. I was learning from other sailors, reinforcing the concepts from the captains license course, sharing sea stories, exchanging used sailboat tips and tricks and getting acquainted with a national organization of sailing instructors. Like most passions, the better you get, the better it gets-- and sailing is no exception. Weekend instruction revenue will help feed my boating habit in the winter, when classrooms are warmer that sunset cruises.
5. Yacht Sales
This is not for everyone. Becoming a yacht sales person is easy. Surviving as a Yacht sales person takes intense dedication, a broad skillset, resourcefulness, and a passion for boats. I am lucky to know such people and luckier still that they’ve taken me aboard. Mike and Mary founders of Paradise Yachts bring honesty, an impressive network, and an impressive results to customers looking to buy sell or learn. I am glad to be learning from them (on weekends and evenings). I won my first boat for sale and I look forward to posting more, so if you want a good, used day sailor with a cabin and popup roof, let me know, I’ve got an option for you.
Do you remember step one above (purchase a seaworthy sailboat) I’d be a fool not to mention that, I’d be glad to help find the right sailboat to carry you over the horizon.
Overall, turning my boat into a business was not the result of master forethought-- just me, doing what I enjoy, and taking the next logical step. Thankfully, they’ve made yachting more affordable and more importantly, I’ve grown better, safer, and smarter at sea. I wish you the same.
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