Tax break for racehorse owners advances in Congress
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Lawmakers moved this week to advance a tax break for horse racing as the sport battles against a number of indicators that mainstream interest is on the decline.
The House of Representatives passed a provision on Tuesday that would extend three-year depreciation for racehorses through 2020, as part of a larger package of measures.
Depreciation is the expensing of certain eligible assets that decline in value over time. It is a means to recover costs by lowering taxable income.
The measure passed by lawmakers this week allows taxpayers to depreciate racehorses 24 months of age and younger over the course of three years, instead of seven. The break is dependent on when the horse is placed into service.
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The tax benefit, which was previously enjoyed by owners, expired at the beginning of 2018, but the proposed bill would be retroactive to that time. It would extend the provision through 2020, though it still requires Senate approval.
“Reinstatement of three-year depreciation for all racehorses helps attract and retain investment in the horse racing industry,” National Thoroughbred Racing Association president Alex Waldrop said in a statement. “We appreciate the House’s work to include this important provision.”
Three-year depreciation for racehorses was not renewed as part of the Republicans’ tax reform overhaul passed in 2017. The law, however, did include bonus depreciation, which allows for the immediate deduction of 100 percent of the purchase price of certain qualifying assets. Industry experts, however, said that the three-year depreciation option continues to be a popular choice among racehorse-owning taxpayers.
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It appears though, that fewer taxpayers may be able to take advantage of the tax break. As interest in the sport wanes, the number of racehorses foaled is also dwindling — to 21,000 in 2019, from 44,000 in 1990.
The racing industry is combating a handful of other headwinds, too. As previously reported by FOX Business, attendance at racetracks is on the decline, and horse deaths — 29 at California’s Santa Anita Park this year, alone — are also on the rise.
Those deaths highlight safety concerns and questions as to whether the animals are being pumped up with drugs. Justify, the 2018 Triple Crown winner, for example, tested positive for a banned substance days after qualifying for the Kentucky Derby.
Another sign consumers are losing interest? As betting in a variety of other sports gains in popularity, wagering at horse racing events fell to about $11.2 billion in 2018 from more than $16 billion throughout the early 2000s.
FOX Business’ Thomas Barrabi contributed to this report.