For years, yacht buyers have recognized that there is a completely legitimate way to significantly reduce the cost of owning a yacht by structuring ownership in a manner that allows you to write-off the purchase price of your yacht and deduct most ownership expenses (insurance, slip fee, maintenance) against your employment income. This can be done by placing the yacht in charter while still having it available for your use and following some basic tax law guidelines. In addition to providing a tax shelter, your yacht will also generate charter income to help offset ownership expenses.
First, let’s discuss the tax benefits of placing a yacht in charter and then we’ll discuss whether this will work for you. The key to understanding why yachts placed in charter can generate significant tax benefits is that these are the same tax benefits available to businesses for the purchase of business equipment.
By placing your new yacht in a charter management program you are converting it from a personal asset to a business asset, essentially an equipment rental business. The relationship between you and the charter management company is structured so that you own the yacht and they assist you in managing your yacht rental business.
Here is a summary of the tax and income benefits available to the owners of new yachts purchased and placed in charter:
Norton Yachts is pleased to be the only sailing charter program on the lower Chesapeake Bay. Give us a call today to discuss placing a new Jeanneau in our charter program today.
Please note that we are not tax advisors and and you will need to evaluate the tax benefits of charter ownership for yourself and in consultation with your tax advisor.