by: Alysha Pruitt Harvey, MAcc, EA, CTS, CTC, CTP, People Advisor

Owning luxury assets like aircraft and yachts isn't just about the prestige; there are potential tax benefits if you know where to look. Let's dive deep into the numbers and see how these assets can be more than just status symbols.

1. Depreciation Deductions: For aircraft used in business, you can take advantage of depreciation deductions. The Modified Accelerated Cost Recovery System (MACRS) allows owners to depreciate the aircraft over five years, offering substantial deductions.

2. Business Use Deductions: If you use your yacht or aircraft for business purposes, you can deduct related expenses. However, ensure that the primary purpose is business; the IRS is stringent about luxury asset deductions.

3. Chartering and Passive Income: Chartering your yacht can provide a source of passive income. Not only does this offset the costs of ownership, but you can also deduct related business expenses.

4. Sales Tax and Use Tax: Some states offer tax breaks on aircraft and yachts if they're used primarily for business. Additionally, strategic purchasing can help in avoiding hefty sales taxes.

5. Leasing Opportunities: Leasing your aircraft to a charter operator can offer tax benefits. While the lease income is taxable, related expenses and depreciation can offset this.

In essence, while yachts and aircraft are luxury assets, strategic planning can turn them into tax-saving tools. Always work with a tax advisor to ensure you're compliant and maximizing benefits.

Thinking of diving deeper into this? Spark your interest and book a call with us.

Talk to us here https://calendly.com/alyshaharvey/strategy

© 2024 Distinct Tax, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This email may only be used pursuant to our Terms & Use Agreement and Privacy Policy. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Distinct Tax, LLC or by email at [email protected].