Lawmakers revive cutting second-home mortgage deduction

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Two congressmen reintroduced a bill that would prevent boat owners from writing off mortgage interest payments if they classify boats as second homes.

U.S. Reps. Tim Walz, D-Minn., and Mike Quigley, D-Ill., reintroduced legislation to eliminate what it calls “taxpayer subsidies for luxury yachts.”

But Jim Coburn, managing partner at Coburn and Associates LLC and a longtime member of the National Marine Bankers Association, said the measure won’t affect the super-rich, as intended, but middle-class boat owners.

“They’re touting the fat cat thing, but what I find funny or interesting about the deduction for boats is, those aren’t the people using their boats as second deductions,” Coburn told Trade Only Today. “The middle class is using them on their 25-footers. These are not liveaboards. The cap for the deduction is up to $1.1 million, so this wouldn’t apply to those yachts. The wealthy are already using that for second mortgages.”

Coburn said the bill would hurt already floundering boat sales if it passes.

“The industry would be hurt by this because sales would, I don’t know if they’d plummet, but it would affect sales in a negative way, and that affects jobs,” Coburn said. “This does the opposite of what they want to do.”

If Congress is against second-mortgage deductions, it should be applied across the board and not just to boats, Coburn said.

“I guess I have a problem with the government focusing on boats when that doesn’t really address the issue of second mortgages,” Coburn said. “If you’re going to eliminate it for the reasons that Congress put forth, you have to eliminate it all.”

Currently, taxpayers are allowed to deduct mortgage interest for as many as two homes from their tax returns. Yachts equipped with bedding, toilet facilities and a kitchen qualify, even if they aren’t used as a primary residence. The Ending Taxpayer Subsidies for Yachts Act would limit the tax deduction to those who use their boats as a primary residence.

Click here for more on the bill.

— Reagan Haynes

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Comments

6 comments on “Lawmakers revive cutting second-home mortgage deduction

  1. Tim Pitts

    The semantics of these legislators is sickening. To call the tax deduction a “subsidy” is disingenuous. A tax write off is not subsidized monies like an EBT card is to some people who don’t do a thing for it (there are some that this safety net is needed for and are deserving, I’m not inferring those people here) and contribute nothing to the community at large. Buying a yacht or boat of any size puts people to work and the money trail goes many other sectors of the community. Just more class warfare and a money grab by politicians. Similar disingenuous subsidies are those levied against “big” oil where they take legal tax deductions and the pols call it a subsidy. Solindra is and was an example of hack subsidies that these very politicians support.

  2. Chris Foster

    I agree that if the deduction is eliminated on boats it should be eliminated on all “second homes”.
    The irony is that about only 27% of taxpayers itemize deductions which you must do to deduct this second mortgage interest anyway. So I’m not sure that the elimination of the deduction would have that great an effect on boat sales among the middle class since most don’t itemize their exemptions in the first place and the rich mostly pay cash.

  3. Al Felker

    We live on our boat so I have no need for a second boat deduction. All second home deductions should be eliminated.

  4. gofins

    So the cap for these deductions is 1.1 million and thats middle class, not the rich, a deduction on up to 1.1 million for a yacht? Confusing article- maybe its just me, but the majority of people using this deduction have 25 footers?

  5. john pardi

    Why is it that people who own second home on the many lakes of Minnesota would be allowed to keep their deductions but working class boat owners of Florida would be denied this deduction Does any Florida lawmakers see the injustice in this?

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