U.S. Rep. Andy Barr (R-KY) on April 27 sponsored two bipartisan bills that would put horse ownership on par with other investment assets and incentivize investment in Kentucky’s horse industry.
“Permanently delivering these tax incentives for owners and breeders will strengthen investment in our signature equine industry,” said Rep. Barr, co-chair of the Congressional Horse Caucus.
The Racehorse Cost Recovery Act of 2023, H.R. 2926, which is cosponsored by U.S. Rep. Morgan McGarvey (D-KY), would make the three-year depreciation schedule permanent for racehorses, regardless of their age when put into service, according to a bill summary provided by the lawmakers.
Currently, Congress must reauthorize this provision in the tax law on an annual basis. If enacted, H.R. 2926 would permanently decrease the depreciation schedule eligible to racehorses from seven years to three for racehorses that are put into service before the age of two into the three-year depreciation asset class, which more accurately reflects the typical career of a racehorse since nearly three-quarters of foals that race have a career of four years or less, the summary says. The change has been enacted by Congress on a temporary, year-to-year basis since 2008.
The Racehorse Tax Parity Act, H.R. 2927, which is also cosponsored by Rep. Morgan, would reduce the holding period for equine assets to be considered long-term capital gains from 24 months to 12 months, putting them on a level playing field with other similar assets, such as homes, stocks and bonds, according to the summary.
“I am proud to lead this effort with my friend, colleague, and fellow Kentuckian, Congressman McGarvey,” Rep. Barr said. “We will continue to work together to deliver results for Kentucky’s signature industries.”
The National Thoroughbred Racing Association, the Kentucky Thoroughbred Association, the Thoroughbred Owners and Breeders Association, the Keeneland Association, the American Horse Council, and the Jockey Club support both bills.
“I’m proud to join my colleague and friend, Congressman Barr, in this effort to strengthen our state’s signature equine industry,” said Rep. McGarvey. “This legislation will deliver much-needed tax incentives for owners and breeders, fostering growth and investment in this critical industry and ensuring Kentucky remains the horse-racing and breeding capital of the United States.”
Both bills have been referred to the U.S. House Ways and Means Committee for consideration.