Now is the time to buy a new or pre-owned boat. Thanks to a new Fedaral Tax Law enacted last year, hefty incentives are available for some buyers. Learn more about the financial benefits and how you can take advantage of them.
BUSINESSES CAN WRITE OFF 100% OF A BOAT PURCHASE
The regulation signed in 2018 allows businesses buying yachts to get a tax discount. It applies to the purchase of both new and used boats and will be effective through the year 2022.
It promises big savings. Those who purchase a boat, in this time period, can write-off the entire sales price as “bonus depreciation” on their taxes that year. There is no ceiling to the purchase amount that the provision can be applied to.
WHO QUALIFIES FOR THESE TAX INCENTIVES?
The benefits are applicable for corporations or LLCs who plan to use the boat of commercial activities. Charter agencies and water tour operators are two entity which could easily qualify for the tax write-off. It can also be applied to significant upgrades made to the yacht and marine equipment bought the same year as the boat.
Many people in Florida’s yachting industry are calling this the chance of a lifetime. In the next three years, boating activities should really take advantage of this tax break. It’s a smart time to grow their business. Talk with your accountant or tax advisor about the possible savings that you could lock down.
YOUR YACHT COULD QUALIFY FOR OTHER TAX BREAKS
If you spend at least 14 nights a year onboard, your yacht could be considered a second home for tax purposes. By doing this, yacht owners can deduct the interest paid on a boat loan. Boats which accommodate cooking and sleeping, can qualify for this tax benefit. This can still apply if you rent the vessel out. You will have to show that you spend at least 10% of the number of nights onboard as it was rented that year. The boat loan lender should be able to provide you a 1098 form to fill out.
Other owners along the Florida coast have entrusted their yacht with charter management agencies. In this way, the boat becomes a business asset and can earn some cash which helps offsets fixed costs. Expenses, on the other hand, can be deducted. Owners can deduct maintenance costs, fuel, docking fees, new equipment and depreciation. This move has the added benefits of getting cleaning and maintenance largely handled by the charter company.
ASSISTANCE WITH NAVIGATING YOUR OPTIONS
The expert brokers at G Marine can help you understand all the latest opportunities to save on your next yacht purchase. Contact our experienced staff to get more information about your options.