Use your boat, plane, or motor home in your small business to create tax deductions. What is now a hobby, for example flying, fishing, or sailing, can be turned into a tax deductible small business enterprise, simply by showing the intent to make a profit. Assets used in a business that contribute directly to the production of income are tax deductible, even if you own them personally. Consider the following example:

Sam lives and breathes fishing. Year after year, he trailers his 30 foot boat behind his Chevy van from his home in Toronto, to North Bay. Sam was already selling his catch to local restaurants, often at a handsome profit, which meant that he was in a tax-deductible business. Sam also wrote to manufacturers of fishing rods, reels, and lures, to see if he could become a distributor, and received several enthusiastic replies, especially from the smaller companies. He bought several samples at wholesale, and began to show them to fellow anglers. He used his boat to house, display, and demonstrate his new line of fishing equipment. Not only has Sam picked up some unexpected income from his venture, but also his expensive hobby has now become a personally and financially rewarding, tax- deductible small business. Look how Sam benefited the first year alone from his small fishing-related business.

The possibilities are endless. Stew combined his interest in flying with another interest, photography, and started a small business he calls “Aerial Shots by Stew.” He printed brochures and business cards, and contacted realtors, the Chamber of Commerce, and the city planning commission about his new venture. He also ran ads in the classified section of the newspaper, offering to give guided air tours for new families moving into the area (for this, he was required to get an additional license). His weekend, part-time business is thriving, and he was able to convert two hobbies into a fun and profitable business. Most of all, he was able to afford his dream of owning his own plane.

There are countless other ways to use recreational assets in a small business and take advantage of the tax deductions and profit potential. Here are a few ideas:

Using your plane for flying lessons.

Sailing lessons on your sailboat.

Chartered fishing trips on your fishing boat.

Water-skiing lessons using your boat and tax deductible skis.

Using your motor home as the principal office for your small business or to display products or services offered.

Using your motor home as a traveling billboard with your ad painted on the side.

Use Third Party Leasing To Make Recreational Assets Deductible.

Third party leasing means offering your boat, motor home, or airplane for rent at fair market rental value, using someone other than yourself as the leasing agent. You may also deduct the business use percentage of the interest you pay on the loans for recreational assets.

When you rent through a third party in the business of leasing, your recreational asset is considered to be used for business purposes. This covers the entire time the asset is available for you, whether or not it is actually used.

If you use the asset for two weeks per year for personal use, and the asset is available for rent for business the balance of the year, you would be granted 50/52 or 96% of the total available tax deductions, including capital cost allowance.

If you are active in the leasing business, and want to offer your products for rent, you can deduct all costs involved, such as approving all leases, formulating a business plan, contracting for maintenance, doing regular inspections, and keeping the business records yourself.

You also would then qualify to take all expense deductions, including capital cost allowance against current income from all sources.

To legitimize your deductions, you can post ads in places like marinas and in the yellow pages.