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Senator proposes eliminating interest deduction on boats

The news came as a surprise. It was in a video to constituents in which Sen. Marco Rubio, R-Fla., proposed dumping the mortgage interest deduction for boats that qualify as a second home.

I say surprised, because I never expected my conservative senator from Florida, a state that builds and sells more boats than virtually any other, would subscribe to such an idea. Worse yet, he called boats “yachts.” Ouch, that sure indicates to me that he doesn’t have good information!

So, in an effort to bring some important facts to Rubio’s attention, I’ve fired off an email explaining why he should reconsider his idea. Here’s what I said:

  • Eliminating this deduction will hit middle-class Americans.
  • There are 17 million boats, not “yachts,” and 83 million boaters nationwide, with Florida the No. 1state in the county. I am a Florida boat owner.
  • The median household income for boat owners falls between $50,000 and $75,000. That’s me.
  • Seventy-five percent of all boat owners have a household income of less than $100,000. Me, too.
  • Consumer boat loans average $48,900, with 83 percent of those borrowers earning less than $250,000 per year. That’s me again.
  • The Treasury Department estimates eliminating the second home mortgage deduction for all qualifying residences (that includes vacation homes, RVs, boats) would save $10 billion annually. Any proposal that would target just boats, as you’ve proposed, would create only a small fraction of the savings. But its impact would be terrible: Manufacturing jobs will be lost by eliminating this deduction.
  • Elimination will have an immediate and direct impact on the marine industry and put manufacturing jobs in jeopardy for thousands of employees who build boats, engines and boat accessories, especially in Florida. My boat was built in Fort Pierce by Florida workers.
  • It’s a total misconception that eliminating this interest deduction would target “yachts” owned by rich people. A “yacht,” by definition, is any vessel that is 26 feet or longer and the deduction of interest is only applicable if the boat has a galley, sleeping berth and toilet.
  • Obviously, a 26-footer is not a rich man’s “yacht.” In fact, my boat is 28 feet, it qualifies for the deduction I take and that was a positive consideration when I was deciding whether to buy the boat.
  • A taxpayer can currently deduct qualified interest on his or her mortgage for a principal and secondary residence only up to a total value of $1.1 million. As a practical matter, those who own the very big boats we commonly think of when we say “yachts” have likely used up their allowable deduction on land-based dwellings. Thus, eliminating the deduction for a “yacht” won’t bring in any significant revenue.
  • This deduction is an important incentive for recreational boat sales and stimulates growth in the industry. If land-sited dwellings and my neighbor’s RVs can qualify for a mortgage deduction as a second home — and they do — why should my boat with basic living accommodations be excluded simply because it floats instead of placed on land or driven down the highway?

It’s notable that NMMA legislative director Jim Currie immediately headed to Sen. Rubio’s office this week. However, nothing will back up Currie’s efforts more than emails and calls from those of us in the industry at large.

So I encourage you, especially if you’re in Florida, to send your own email to Sen. Rubio. Just go to and click on Contact. There’s no way we should stand idly by while being singled out for a detrimental policy in the ongoing “fiscal cliff” debacle in D.C.

And since this is my last Dealer Outlook until after the upcoming holidays, I wish you a very Merry Christmas and a prosperous New Year.


13 comments on “Senator proposes eliminating interest deduction on boats

  1. Peter Swanson

    Rubio also opposes ending the travel ban to Cuba. If the ban were to end, it would provide a significant and immediate boost to the marine trades in Florida for the simple reason that, no matter where they originate, boats heading to Cuba must pass through Florida, and there would be thousands, if not tens of thousands. Stand by for more in an upcoming Loose Cannon.

  2. bill

    You have got to be kidding me. I can see this proposal coming from a Senator in Iowa or Montana, but FLORIDA? Can you say TONE DEAF? This is his constituency, it is not just the manufacturers, but the dealers and the vendors and the service industry that will be smashed by this. Have we not learned from the luxury tax fiasco that taking away incentives to buy boats is not exactly a brilliant move?? And why just boats?

  3. Dean

    A “Yacht” as defined by the State of Florida in requiring a license to sell boats is 33′ and up. It is also defined as such in Wikipedia. Unfortunately your 28 footer is not a yacht but still and should be eligible for the second home deduction. The economy has hit our industry hard for the last few years and we don’t need another change that puts us down further.

  4. outboardman

    Oh c’mon. A billion here and a billion there and pretty soon you’re talking about real money. It’s time all of us Americans stop asking for deductions that we can easily live without. I’m far from wealthy, but our second home at the lake is something we enjoy and would own it regardless of mortgage interest deductions. I understand your fears, but I don’t think the loss of deductions will grossly affect the marine industry. What bothers me more than this proposal is the fact that we can’t stop this juggenaut spending by Congress and the President on foolish things. We have just GOT to stop supporting the governments of other countries and take care of our own. By rebuilding our country, we will see employment rise and income taxes will increase as a result. Any economist worth his salt will tell you that full employment is the key to a healthy economy.

  5. Chris Foster

    I applaude Senator Rubio for his stance. To solve our fiscal problem there can be no “sacred cows”. Every revenue measure and spending cut has to be on the table. I own a 22 ft Grady White which is not eligible for the interest deduction and I will continue to own boats regardless of the deductibility of interest expense. If we don’t stop trying to protect our “favorite” industries, nothing will ever get accomplished in dealing with our fiscal problems. We all have to be willing to put an oar in the water to get things done. I wish Senator Rubio every success and admire his courage in trying to do the right thing for all of us.

  6. Steve Farb

    The “Luxury Tax” several years ago nearly shut down US Marine…the former maker of Bayliner. This is crazy. The 24′-40′ cruiser market is already in severe decline in this country. Those are boats owned by the middle class and the same folks that generally take that 2nd mortgage deduction for their “house” on the water. There has been no taxpayer bailout of the recreational boating industry in this country and thousands of jobs have already been lost in the last four years.

  7. Gerald Pitts

    Don’t forget that the IRS interest deduction qualification for interest on a boat as a second home includes the fact that the owner(s) must stay overnight on the vessel at least 14 days per year and, in the event the boat is chartered to others then the overnight stay for the owner(s) must be at least 10% of the total days of charter. It is surprising that Senator Rubio would mention ‘yachts'; that conjures up a picture of a large, luxurious vessel. If Congress were to enact legislation that eliminated all ‘second home interest deductions’ we might be ablt to live with that. Outboard Man is absolutely on point with the runaway spending. Obama is going to bring us a lot of pain in the next four years – he doesn’t have to worry about running again – He’ll have more and more committees for more and more reasons, all staffed by supporters who will make over 100K per year and probably meet once a month. He won the re-election and now the voters that put him in office will suffer as well. That’s if you can find anyone that will admit to voting for him.

  8. Peggie Hall

    Whyizzit that they only target “yachts” when they go after second home deductions? What about RVs, which are far more plentiful and cost as much or more than “yachts?” What about all the McMansion vacation homes and all the second homes in and around DC that belong to members of Congress? There’s real money in those deductions!

    However, Florida’s somewhat unique definition of a “houseboat” may be largely responsible for Rubio’s misguided thinking. When FL enacted their marine sanitation legislation, they decided that any vessel 26′ and up could be considered to be used primarily as a residence instead primarily as a means of transportation, and therefore could be classified as a “houseboat” (allowing FL to get around the federal prohibition against requiring any vessel to INSTALL a toilet and MSD). That pretty much includes just about every boat that would qualify as a second home and mislead him into thinking that anything big enough to be a “houseboat” has to be a “yacht.”

  9. Ed Parker

    As a staunch Tea Party conservative, it sickens me to realize that I’m subsidizing the cost of a second “home” — be it an RV, yacht, or vacation cottage — for anyone, whether they’re wealthy or not. I completely support Rubio’s position on the elimination of the mortgage interest deduction. Those that support this ridiculous burden on the taxpayer need to quit calling themselves conservatives. Pay your own way in life and I’ll pay mine.

  10. Eric Sponberg

    I did not vote for Rubio. But I think this idea makes sense. It’s not a deduction on all boats that he’s asking to repeal, just those that quailfy as a second home. Personally, I think ALL deductions are just a futile endeavor to help you think you are getting something for nothing. First, I think ALL deductions on SECOND homes, if they still exist, should be repealed. A person or family needs only one primary home. If you can afford a second home, or a boat as a second home, you don’t need a deduction for it. We all have to sacrifice something to balance the country’s budget and get rid of the deficit. And yes, the government has to be serious about cutting out spending. And I have voted Democrat more in my life than Republican.

    Finally, wouldn’t life and taxes be a lot simpler if we completely revamped the tax code so that there were NO DEDUCTIONS, NO EXEMPTIONS, and NO CREDITS. Most of the tax code would simply disappear! What could be simpler?! You would pay taxes on your gross income at lower rates, not your “adjusted gross income” at higher rates. All your income is totaled by about 2/3rds the way down on the front of the Form 1040. At the bottom of the page, you would figure your tax and the amount left to pay or the amount of refund or carry over. One Page Taxes–that’s all we need. Simple! Easy!

  11. Tigerpilot

    This legislator is clearly not representing his people and deserves to be removed at his next election. Who does he think he represents? Or is he trying to uphold the reputation of many of the rest of his party in having no feelings for the middle class?

  12. C. Moore

    I would believe that much less than 50% of the boats (Yachts) under 40 ft that qualify for this deductable are financed & most over 50 ft, and especially over 80 ft are paid in cash or on a “progessive payment plan” as they are built. Boating is a passion driven activity not a mortgage interest deduction driven activity. I believe the deduction is more a motivator to finance than not to finance. This makes this an incentive & carrot for the banking industry more so than a benifit to the boating industry. I do believe that if the deduction be removed for boats then all similar deductions (RV’s, second homes, etc) should also go away in the name of fairness.
    Some or most of you may not remember the similar concerns when credit card & car loan interests was also fully deductable. It didn’t stop people buying on credit cards or buying cars. But those consumers at that time also tended to live within their means(income) & build equity not borrow agianst it.

  13. CaptA

    OK–Here is my take on it. It is quite unfair to target boat owners. If you want to target all second home mortgages (i.e, second houses, boats, RVs etc) then fine. I wont like but I would not fight it. It is either all or nothing. Rubio is an idiot.

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