Nobody every said owning a boat was cheap, but thanks to IRS rules for tax deductions on second homes, it can be made slightly more affordable. The key is in knowing exactly what constitutes and what does not constitute a second home and how that might apply to you and your boat. Recognize in advance that any boating deduction you claim will be scrutinized, so stick to the letter of the law.

The qualifiers that make your boat a second home are, not so surprisingly, roughly the same as for a primary residence. You need a galley, a place to sleep and a head, but you don't want to fudge, here. A barbeque out on deck does not a galley make, and throwing a mattress across the seats behind the captain's chair doesn't equate to sleeping quarters. But if your boat has an enclosed cabin with the aforementioned features, and you have a secured loan on the boat, you may be able to claim a tax deduction on the interest. (Note: A secured loan is one in which the borrower pledges an asset as collateral for the loan. In the case of a boat loan, the boat is collateral and may be reclaimed by the lender if the borrower defaults.)

There are other circumstances that can affect your ability to claim your boat as a second home. For instance, you can claim only one. So if you already claim a vacation condo or a mobile home, you cannot claim your boat as well. Then there's the whole rental issue. If you rent out your boat–even for as little as a single day–you must then spend a minimum of 15 nights aboard it within that calendar year to claim the second home deduction. To be on safe side, you want to document those nights, too.

Bottom line is to keep things clean and simple, sticking to the letter of the law, and you can enjoy your boat and get a tax break from Uncle Sam for doing so.

- Linda Hoff