Tax Strategies for the boat owner:
For yacht owners looking to offset the substantial costs of ownership, Bright Hill Advisors, LLC has pioneered an innovative “Yacht as a Business” program.
By structuring yacht ownership within a business entity and operating it actively for charter revenue, owners can potentially benefit from significant tax deductions and advantages.
The Concept The basic premise is fairly straightforward – place your yacht into a corporation or LLC set up as a for-profit charter business.
By actively operating the yacht to generate charter income, you can qualify for tax deductions on expenses, depreciation of the yacht itself using accelerated schedules like Section 179,
and other benefits that offset your income from the business as well as other sources like a regular job.
However, it’s critical that the business is set up and run properly to meet IRS requirements for active trade or business rather than just a passive asset.
Bright Hill Advisors’ expertise lies in guiding clients to structure their “yacht business” compliantly.
The Process Here’s a high-level look at how Bright Hill Advisors helps yacht owners implement this program:
- Evaluate your situation and yacht goals to determine viability
- Assist in choosing a suitable yacht model and specifications
- Set up a business entity like an LLC and develop a legitimate business plan
- Structure the yacht business to qualify for maximum tax benefits
- Facilitate placement with a reputable charter management company
- Provide ongoing advice to actively operate the business and remain compliant
Tax Benefits Two key tax provisions make this program particularly advantageous for yacht owners:
Section 179 Deduction: This allows deducting the full purchase price of the yacht and other equipment in the first year instead of depreciating over many years.
Bonus Depreciation: Any portion of the purchase price not deducted under Section 179 can potentially be bonus depreciated at 60% initially (in 2024), then decreasing percentages annually.
By working these deductions which can reach into the millions, yacht owners can dramatically reduce their out-of-pocket costs of acquiring and operating the yacht through the business.
Owner Use One major perk is that Bright Hill Advisors’ program still enables owners to use their yacht through allocated owner time agreed upon with the charter company.
So you get to enjoy your dream yacht while offsetting the costs through the business.
The Right Way Bright Hill Advisors emphasizes the importance of setting up and operating a legitimate business backed by a real profit motive – trying to artificially generate deductions without an active business can bring IRS scrutiny.
But approached properly, the “Yacht as a Business” program provides an innovative avenue for making yacht ownership financially viable.
If you’re interested in learning more about how this program could work for your yacht ownership goals, Bright Hill Advisors offers free consultations to evaluate your specific situation.
You can reach out to our team to discuss turning your yachting dreams into an affordable reality.