Boating Interest Deduction Threatened

Boats as second homes under fire

Published online: Jul 20, 2011 News
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There have been two proposals that could dramatically affect houseboaters come tax time. According to Christine Pomorski, from the National Marine Manufactures Association (NMMA), in May the Ending Taxpayer Subsidies for Yachts Act (H.R. 1702) was introduced in the House of Representatives, a bill that would remove the deductibility of interest on boats that are used as second homes.

This misnamed and misguided legislation is based on the incorrect premise that American taxpayers are subsidizing extravagant lifestyles of yacht owners, overlooking the fact that 75 percent of all boat owners in the US have a household income of less than $100,000 per year.

A yacht, by definition, is any vessel that is 26 feet or longer, and the deduction on interest expense is only applicable if the boat has a head, galley and sleeping berth. Many boats of this size function as a second home in the same manner as second homes on land, which enjoy similar tax breaks on their mortgage interest. If this legislation becomes law, sales of boats and boating services would diminish, risking thousands of American jobs. In July, in response to efforts to eliminate $1.29 trillion from the country's deficit, Sen. Jay Rockefeller (D-WV) and others proposed eliminating the deduction for interest paid on the purchase of a boat with a head, galley and sleeping berth over 26 feet that is used as a second home.

Although the proposal attempts to target "wealthy yacht owners," as mentioned above, more than three out of four of all boat owners in the U.S. have a household income of less than $100,000 per year. In addition, the proposal unfairly targets boaters since the interest deduction would still remain for second homes on land as well as RVs.

Concerned houseboaters can go to www.capwiz.com/nmma/issues/alert/?alertid=46198501 to learn more and to write a letter to their Member of Congress.  

 

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