Congress is messing with our Boat Interest Deduction again.....

Congressman Gary Peters targets "yacht loophole"

By Nathan Hurst – The Detroit News

May 4, 2011

Rep. Gary Peters wants to throw a big income tax loophole for yacht owners overboard. 
The Bloomfield Township Democrat announced Wednesday he and two colleagues -- Reps. Mike Quigley
of Illinois and Tim Walz of Minnesota, both Democrats from affluent Midwest suburbia --
introduced H.R. 1702, the "Ending Taxpayer Subsidies for Yachts Act."
 
That bill, if passed, would disallow yacht owners from being able to deduct the mortgage
interest on loans for their big boats from their annual income tax returns. That allows
them to significantly lower their tax burdens and their payments to the Internal Revenue
Service.

In a statement making the announcement, Peters said getting the nation's deficit reined in
was a top priority "and that means simplifying the tax code and eliminating special interest
tax giveaways like the yacht loophole."  The only requirements to get the deduction are that
the boat be able to serve as a home, meaning it needs someplace for people to sleep, use the
bathroom and prepare food. Peters' proposed change would require the boat to be used as a
primary residence, which only about 100,000 Americans do full-time.

Representative Quigley (D-IL) introduced the Ending Taxpayer Subsidies for Yachts Act (H.R. 1702)
to amend the Internal Revenue Code of 1986 to allow the mortgage interest deduction with respect
to boats only if the boat is used as the principal residence of the taxpayer. (5/3/11).

Link to H.R. 1702:  http://www.gpo.gov/fdsys/pkg/BILLS-112hr1702ih/pdf/BILLS-112hr1702ih.pdf

NOTE:  The current legislative proposal appears to only impact new boat loans originated after

the measure becomes law.  Holders of existing boat mortgages would apparently be "grandfathered-in",

and retain their right to an IRS boat interest deduction, as currently written.  Additional hearings now

scheduled could easily change the language for better or for worse.