Will Boat Owners Lose a Tax Break? Or Will Tax Reform Put More Money in Your Pocket?
By Peter A. Janssen
Is owning a boat – or taking out a loan to own a boat – about to become more expensive? The answer is yes, according to the tax reform bill recently passed by the House. It would end the mortgage interest deduction for second homes (which also applies to boats and RVs, as long as they have facilities for sleeping, eating and bathing).
The Senate version of the bill, passed by the Finance Committee last week, retains the current law on deducting mortgage interest for first and second homes. It’s not clear how all this will end up. But Republicans on Capitol Hill want to work out the differences in the House and Senate versions and send a final bill to President Trump before Christmas.
Under the current law, you can deduct the interest you pay on up to $1 million in mortgages for first and second homes. The House bill could cut that in half, capping the deduction at $500,000 for first homes and ending the second home deduction entirely. It also would not allow any deduction for interest on home equity loans. Those changes would take effect in 2018. The Senate bill, so far, would keep the deduction at $1 million for first and second homes.
The real estate industry is not happy with the House plan, and is lobbying to change it. But Thom Dammrich, the president of the National Marine Manufacturers Association, told CNBC that the overall tax reforms in the House plan would help the boating industry and boat owners through reduced taxes. “In looking at the bigger picture,” he said, “the plan’s lower tax rates are more important for a boater than the mortgage interest deduction, as it can provide greater savings overall.”
In California, the state assembly recently considered a proposal to end the second home deduction, but it died before it could come up for a vote.
Stay tuned to see how all this works out. Read more: