Ending Tax Breaks for Yachts
H.R. 2563 Ending Taxpayer Subsidies for Yachts Act
1. “There’s absolutely no reason why taxpayers should subsidize luxury yachts,” said Democratic Representative Mike Quigley of Illinois when he introduced the two-page bill in 2013. It amends a provision in the federal tax code that allows boat owners to deduct mortgage interest on vessels used as second homes. Taxpayers can claim a deduction on as much as $1.1 million in mortgage payments on two homes: a “main home” where they live most of the time and a second one.
2. Boat owners qualify if the vessel has basic living accommodations, including a toilet, a galley kitchen, and a place to sleep. The 73-year-old tax break applies to small weekend sailboats as well as multimillion-dollar yachts. It’s one of many provisions under scrutiny as Congress considers a major overhaul of the tax code. The boat industry estimates about 5 percent of the 12 million boats registered in the U.S. are eligible for the deduction.
3. The bill’s sponsors say cutting the break for boats will save more than $150 million over 10 years—a sliver of the estimated $8 billion that second-home interest deductions cost the U.S. each year. The boat industry argues it’s not the rich but average Americans who’ll take the hit. Nicole Vasilaros of the National Marine Manufacturers Association says the average boat loan is for $49,000, and more than three-quarters of owners have household incomes of less than $100,000.