Guides · Yachts

Yacht taxes in the US: questions and answers

There is no federal yacht tax, but a yacht is taxed when it is bought, often while it is owned, when it is sold at a gain and when its owner dies. Here are the rules behind the questions owners ask most.

Short answers to the questions people most often ask about yachts and US tax. For the full treatment — registration, charter structures, depreciation and enforcement — see Yachts & Superyachts and Yacht Charter Business.

Are yachts taxable assets in the US?

Yes. A yacht can be taxed at four points:

• Purchase — state sales tax, or use tax if bought elsewhere and brought into the state.
• Ownership — annual personal-property tax on boats in some states and localities, plus registration and documentation fees.
• Sale — federal (and usually state) income tax on any gain.
• Death — the yacht’s value is included in the owner’s estate for federal estate tax (exclusion $15,000,000 for 2026).

There is no federal yacht tax today. The 1990 federal luxury tax on boats over $100,000 was repealed in 1993 — see luxury taxes.

How much is the yacht tax?

It depends on the state where the boat is bought and, above all, where it is used and kept. Some examples of state caps on boat sales tax, as of October 2026:

Many states have no cap, so the full combined rate applies. Buying in a low-tax state does not avoid tax at home: the state where the boat is principally used can usually charge use tax, with a credit for tax paid elsewhere. See sales and use tax and yacht use-tax enforcement.

Can I deduct my yacht?

• Mortgage interest. A boat with sleeping space, a toilet and cooking facilities can be a qualified second home (Treas. Reg. §1.163-10T(p)(3)(ii)). Interest on up to $750,000 of combined home acquisition debt is deductible for itemizers; the One Big Beautiful Bill Act made that limit permanent.
• Property tax. An annual ad valorem tax on the boat is a deductible personal-property tax, within the state-and-local-tax cap ($40,000 for 2025, $40,400 for 2026, reduced for incomes above $500,000 / $505,000, and reverting to $10,000 in 2030).
• Charter use. Depreciation and operating costs are deductible only if the boat is used in a real business. A boat counts as a “dwelling unit” under the vacation-home rules of §280A, so personal use above the greater of 14 days or 10% of rental days limits deductions, and the hobby-loss rules of §183 apply. Entertainment use is disallowed under §274.

Can property taxes be added to the boat’s basis?

Generally no. Basis is the purchase price plus capital improvements and acquisition costs such as sales tax paid on the purchase. Recurring annual property taxes are not capital costs; they are either deducted as taxes or not deducted at all. Section 266 allows an election to capitalize certain taxes and carrying charges on personal property only for the period before it is first put into use (Treas. Reg. §1.266-1(b)(1)(ii)) — which rarely helps a yacht owner.

If I live aboard and sell the yacht, do I report it?

A gain must be reported as a capital gain (long-term if owned more than a year). A loss on a boat used personally is not deductible (§165(c)). If the yacht genuinely was your principal residence for at least two of the five years before sale, the §121 exclusion of up to $250,000 ($500,000 for joint filers) may apply: the regulations list a houseboat as property that can be a principal residence (Treas. Reg. §1.121-1(b)(1)). Whether a cruising yacht qualifies depends on the facts, so keep evidence of residence (mail, voter registration, tax returns listing the boat).

Is a yacht a collectible?

No. Boats are not in the §408(m) list, so long-term gain is taxed at the normal capital-gain rates (up to 20%, plus 3.8% net investment income tax where applicable), not the 28% collectibles rate.

Reviewed October 2026