Please select your home edition
Edition
Navico AUS Zeus3S LEADERBOARD

How will the new tax law affect boat owners?

by Peter A. Janssen 28 Dec 2017 07:05 AEDT
How will the new tax law affect boat owners? © Cruising Odyssey

The other shoe has dropped. The House and Senate worked out their differences and passed the new tax reform package, and President Trump just signed it. Here's what it means to boat owners:

Second-Home Deduction: The new law preserves the mortgage interest deduction on first and second homes (and boats and RVs that have the equivalent of a bedroom, bathroom and cooking facilities), but it lowers the cap from $1 million to $750,000 for new mortgages. It does not affect any existing mortgages. The preservation of this deduction is generally viewed as very good news for many boat owners. But the new law eliminates the deduction for interest on home equity loans (which previously was allowed on loans up to $100,000).

SALT, or State And Local Taxes: The new law caps the deduction for state and local income and property taxes at $10,000. This will not affect the majority of boat owners, but it is a hard hit on people living in high-tax states, including New York, New Jersey, Connecticut and California, and many who have purchased expensive homes at least partially based on their ability to deduct their state taxes from their federal tax returns.

Estate Tax: If you're counting on a big inheritance to pay for a new boat, you're in luck. The new law doubles the exemption, previously at $5,490,000. This is very good news for a very small group of people.

Pass-Through Businesses: Many boat builders, boat dealers and boat owners have organized their businesses as joint ventures, LLCs, S Corporations or sole proprietorships, where the profits from the business are counted in the owners' personal tax returns. The new law gives these owners a 20 percent deduction for the first $315,000 of joint income, which is a very nice Christmas or holiday present.

So how does all this play out in the real world of cruising and boat ownership? It probably won't make a big difference to most boat owners or prospective boat owners. As one friend of mine in the business said, most boat buyers will still think, "Hey, I want the boat and I'll worry about the taxes next April."

This article has been provided by the courtesy of cruisingodyssey.com

Related Articles

Yoann Richomme returns to Fastnet
Says Elodie Bonafous' is the boat to beat This weekend's biennial Rolex Fastnet Race - one of the oldest classics in sailing - sees the IMOCA Class return to the racetrack, with eight boats on the startline on Saturday for what is the second round of this year's IMOCA Globe Series Championship. Posted today at 3:12 pm
Fuerteventura PWA Grand Slam Day 6
Arguably the best female Freestyle final of all time Sarah-Quita Offringa pushed all the way by Maaike Huvermann in arguably the best female Freestyle final of all time, while Yentel Caers wins ‘Battle of Belgium' against Steven Van Broeckhoven to hold respective event leads. Posted today at 11:48 am
Admiral's Cup 2025 | D2 Inshore Racing Videos
One race and then it was all done. Very light and even a bit of liquid sunshine. One race and then it was all done. Very light and even a bit of liquid sunshine. Posted today at 10:57 am
How to follow RORC Centenary Rolex Fastnet Race
At present 451 yachts are entered, which, if all start on Saturday, will break the previous record. This year's centennial edition of the Rolex Fastnet Race will set sail this Saturday, 26 July from the Royal Yacht Squadron line off Cowes, Isle of Wight, bound for Cherbourg-en-Cotentin, France. Posted today at 10:30 am
WASZP Games 2025 Day 3
When racing got under way, it was a game of patience, persistence, and pressure-hunting Day 3 of the WASZP Games dawned with cautious optimism as the early risers in the boat park were greeted by a light but promising northerly breeze. However, an approaching front caused the race committee to call a three-hour postponement. Posted today at 8:23 am
Masters Games in Canberra early bird entries
More than 200 sailors are expected to hit the waters of Lake Burley Griffin More than 200 sailors are expected to hit the waters of Lake Burley Griffin in Canberra this October as part of the 2025 Australian Masters Games Posted today at 6:52 am
Admiral's Cup Paul Wyeth Wednesday Photo Gallery
The wind was lighter, the conditions were overcast, but Paul still makes the action come alive The wind was lighter, the conditions were overcast, but Paul Wyeth still makes the action come alive with his photos. Here's his gallery from the racing on Wednesday in the 2025 Admiral's Cup. Posted today at 5:26 am
Admiral's Cup PKC Media Wednesday Photo Gallery
Out on the water on Wednesday to capture the lighter wind action Patrick Condy of PKC Media was out on the water on Wednesday to capture the lighter wind action in the 2025 Admiral's Cup. Here are his selection of photos from the racing! Posted today at 5:06 am
Admiral's Cup Ingrid Abery Wednesday Gallery
Up close and personal with the teams on a lighter wind day Thanks to her long lens and skill, Ingrid Abery got up close and personal with the Admiral's Cup teams on a lighter wind day in the Solent. Enjoy these crew photos, and many more in the gallery above! Posted today at 4:46 am
Admiral's Cup 2025 | Day One Inshore Racing Pics
An excellent day's racing with good breeze. Day One of Inshore Racing at the 2025 Admiral's Cup was highlighted by good breeze. Posted today at 1:09 am
Allen Dynamic 40 FooterSea Sure 2025Jeanneau Sun Odyssey 350