Peters: End Taxpayer Subsidies for Yachts

Press Release

Americans who just filed their taxes are familiar with the tax deduction for the interest on home mortgages -- but a loophole in the tax code allows that same deduction to apply to interest payments on yachts.

With the United States facing a budget crisis, Representative Gary Peters introduced legislation Tuesday afternoon to close the Yacht Loophole, a special provision that amounts to a taxpayer-funded subsidy for yachts.

"We need to get the deficit under control, and that means simplifying the tax code and eliminating special interest tax giveaways like the Yacht Loophole," said Rep. Gary Peters. "Homeownership is part of the American Dream and we should encourage it, but yacht owners don't need any special handouts, especially in the middle of a budget crisis."

The Mortgage Interest Tax Deduction was formally established by Congress in 1986 for the purpose of helping middle class families achieve the goal of homeownership. The law allows people to deduct mortgage interest for up to two mortgages, but it also allows either or both of those mortgages to be for a yacht.

Yachts equipped with bedding, toilet facilities, and kitchens qualify for the tax break, even if they aren't used as a primary residence.

The legislation (H.R. 1702) introduced by Representatives Gary Peters (MI-9), Mike Quigley (IL-5), and Tim Walz (MN-1), would eliminate the loophole for yachts that are not used as a primary residence. People who live on their boats full-time would be able to continue deducting their mortgage interest.

As of the 2000 Census, only around 100,000 people in the United States lived full-time on boats.

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