It’s safe to say that we all want to pay as little on our tax bill as possible. There are many ways to lower the amount you could owe, some of them are quite complicated, some are more effective, and some are just plain ridiculous! These five tax loopholes are nice to know about, even if they are a little out there.
The yacht deduction
That’s right, you can get a tax break for mortgaging a yacht. Mortgaging a yacht? Technically, you can mortgage just about anything that can fit the legal definition of a “home.” If the yacht has areas for sleeping, cooking, and toilets, then it qualifies! This means anyone can afford to mortgage themselves a yacht and deduct the interest they pay on that mortgage from their taxes.
Tax-free rental income
The IRS has a law which stipulates you can rent your home out for 15 days without having to pay any taxes you earned on the income from the rental. Smart homeowners who live near major event centers can take advantage of periods of increased tourism to rent their house out for this short period and make a tidy, tax-free bit of money.
Healthcare bills — future, present, and past
In order for your healthcare bills to be tax deductible for the 2018 year, they need to exceed 7.5 percent of your income. However, if you have an HSA (health savings account), you can actually use all your medical bills from previous years that you haven’t claimed yet. You can even count planned future expenses!
Losses before winnings
Went to Vegas in 2018? You can actually deduct your gambling losses! Some of them, anyway. The IRS allows gamblers to deduct up to the amount they won on a gambling trip. You can also deduct reasonable expenses (travel, room and board, etc) costs you incurred getting to your gambling destination.
Did you have someone borrow money from you and never pay it back? You might be able to deduct the amount of the loan from your taxes. Originally, the laws that govern this were intended for businesses, but personal loans to family or friends can also qualify, allowing you to make the most of a bad situation.