The interest deduction for boats as second homes is under fire, and we need to let Members of Congress - particularly House Members - know that this is just plain wrong. On Tuesday, May 3, 2011, three Members of the U.S. House of Representatives introduced H.R. 1702, a bill that would remove the deductibility of interest on boats that are used as second homes. This bill, the "Ending Taxpayer Subsidies for Yachts Act," is both misnamed and wrong-headed and would accomplish nothing except putting American boat builders and other boating service providers out of work, precisely at a time when the industry has not recovered from the worst downturn since the Great Depression. Go to the NMMA federal relations page where you will find the "Current Issues: NMMA Policy Briefs" and sample letter to email to your Member of Congress today!
This legislation is apparently based on the premise that "yachts" are owned by rich people and that the American taxpayer is subsidizing their extravagant lifestyle. This is a great misunderstanding. 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. We know that a 26-footer is hardly what we all think of when we hear the word "yacht." Many a boat that can function as a second home on a lake or river fits the definition of "yacht." If land-sited dwellings and RVs can qualify for an interest deduction as a second home - and they can - why should a live-aboard boat be excluded simply because it floats on the water instead of being placed on land or driven down the highway? The logic is simply not there.
Furthermore, it is almost a certainty that the individuals that this legislation purportedly targets the owners of what we might term "mega-yachts" do not use this deduction. Those who are rich enough to afford the million-dollar boats the legislation's authors probably meant to target undoubtedly already have second homes on which they take the mortgage deduction. Instead, this bill would target the middle income family that decides to have their second home float on the water, instead of purchasing a stationary home or a rolling home. It all comes down to basic fairness.
If this legislation were to pass, its unintended consequence would be that sales of boats and boating services would diminish, thousands of American jobs would be placed at risk, and many middle class American families would be forced out of boating and deprived of their summer home on the water. Please go to http://www.nmma.org/government/issues/federal.aspx and find "Current Issues: NMMA Policy Briefs" for the sample letter you can use to email your Member of Congress and urge them to oppose H.R. 1702. Please act before it is too late.