A boat is considered a second home for federal tax purposes if it has a bathroom, a sleeping berth, and a kitchen. However, it is known to be a red flag for IRS audits. This is something you should weigh with your CPA or financial advisor.
Some things you can consider:
Some energy credits do not apply to a second home like a fuel cell property installed in your home for the Residential Clean Energy Credit and a Home Energy Audit.
If you own a second home like your boat, you can claim the solar tax credit on qualified expenses as long as the home is located in the United States, you live in it for part of the year and you do not rent it out to anyone else.
Qualified homes for this credit include:
- House
- Houseboat
- Mobile home
- Cooperative apartment
- Condominium
- Manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards
These additional requirements must also be met:
- Your solar equipment needs to be installed between January 1, 2017, and December 31, 2034.
- Your solar equipment must be located at a residence of yours within the United States.
- The solar equipment is new or being used for the first time (meets the original installation requirement for claiming the credit).
And this also must be met to claim the tax credit:
- You must have purchased the solar system with cash or through some form of financing that isn’t a lease or an agreement to pay a solar company for electricity generated by the system.
- You purchased an interest in a community solar project that is separate from your residential property, if the electricity generated is credited against, and doesn't exceed, your home’s electricity consumption.
To claim the credit, you’ll need to file IRS Form 5695 as part of your tax return. You'll calculate the credit on Part I of the form, and then enter the result on your 1040.
For homes in the US, the Residential Clean Energy Credit allows a 30% tax credit on the cost of qualified fuel cell property, with a maximum credit of $500 for each half kilowatt of capacity, for installations from 2022 through 2032.
Click here for "Federal Tax Credit for Residential Solar Energy"
Click here for "Residential Clean Energy Credit"
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