Categories: Texas Legislature

No Yacht Left Behind

Texas homeowners desperate for tax relief might want to consider making a houseboat home.

House Bill 4032, legislation capping the sales tax at $18,750 for boats as long as 115 feet, is headed to Gov. Greg Abbott’s desk. This means wealthy yacht owners will see major savings and Texas revenues will see significant loss.

Sen. Larry Taylor (R-Friendswood), who authored the bill  claims the benefit to wealthy yacht owners is not the point of this bill.

Boats purchased in Texas are currently subject to a 6.25 percent state sales tax, and local taxes can add an additional 2 percent. In Port Aransas, Texas, a 74-foot yacht is listed at $7.7 million – available for purchase now. Under HB 4032, the tax break for purchasing this yacht could be worth up to $635,250.

In an article by the Houston Chronicle, Sen. Taylor said, “People who buy big boats are buying them in other states.” Taylor attributed this to market share lost to other states, such as Florida, offering tax exemptions for yacht sales.

Taylor regards HB 4032 as a jobs bill, rather than a tax break bill, presuming the tax cut will lead to a spike in boat sales. He says a spike in boat sales would lead to a larger demand for fuel, equipment, and repairs for boat owners.

However, data from the Texas Parks and Wildlife Department suggests a fairly constant trend in large boat sales. Of the 2,726 non-commercial boats between 40 and 115 feet in length, 1,253 were registered from 1999-2008. From 2009 to the end of last year, 1,141 boats of this size were registered in Texas.

HB 4032 budget analysis predicts the tax cut will have a negative impact on Texas revenue of $3.5 million over the next three years.

Homeowners may not have seen the tax relief they wanted this session, but houseboat owners have a break heading their way.   

RA Staff

Written by RA News staff.

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