If you are the owner of a luxury motor yacht, there is an extremely good chance that you are very successful in whatever business you are in. How would you like to turn that business acumen into a way to earn some extra income, and offset the expenses of yacht ownership?
Did you know you can run your yacht as a business?
It all starts with making your boat part of a charter fleet. Savvy yacht buyers know that operating your vessel as a charter yacht is a totally legal way to write off some or all of the purchase price of the boat, as well as deduct a lot of your ownership expenses, such as dockage, insurance, crew and maintenance.
You can do all of this, while still enjoying access to your boat when you want to use it for your personal pleasure. However, you have to be very careful how you go about it, so you do not run afoul of the IRS!
What Qualifies as a Charter Business?
First of all, you need to understand we are talking about the yacht owner who wants to keep his or her yacht in local waters, like here in South Florida, so he or she still has access to it, and not run charters out of some exotic port in Turkey. Placing a yacht in charter allows you to do that, and also has the immediate benefit of obtaining space in a safe and secure marina, which is something of a premium in and around Ft. Lauderdale.
By placing your luxury motor yacht in a charter income program, such as we run here at FYM, basically you are taking your boat from a personal asset, and making it a business asset. That being the case, you can now receive the same tax advantages of operating any other kind of business. You still own the boat, but you are engaging the yacht management company to assist you in running your “yacht charter business.”
Taxing Concerns for Yacht Owners
However, the IRS has strict tax codes you must comply with, to ensure that your motor yacht is indeed being used as a business. You have to make sure that the IRS sees that you are really using your boat as a “business” and not a “hobby.” Of course, signing on with a charter fleet is a good way to solidify that distinction. Still, the tax authorities are going to want to see detailed records of every expense as well as the amount of income. To definitely steer clear of the IRS’s “hobby-loss” rules, your charter business should try to show a profit every few years.
Again, this is where signing on with a fleet with a proven charter income program can help.
Every yacht owner’s tax situation is different, and we are not tax advisors, but, we would be happy to speak to you at length about our programs, and see if they make sense for you.
How Much Can I Actually Save?
At FYM we have been placing new and pre-owned motor yachts in charter for a number of years. It is not uncommon for owners who have placed their yachts in our charter fleet to reduce the costs of owning and operating their boats by as much as 30– 70%, through a combination of tax deductions, offsetting expenses, and charter income.
Besides a great opportunity to earn income and offset expenses, there are several other advantages to putting your yacht into a charter fleet. If this is something you have been thinking about, why not contact us today? We would be happy to discuss all of the possible advantages with you.
Operating a motor yacht can be costly. Putting your boat in Charter can earn income, and defray some of the costs of ownership. On Demand Yachting from FYM can show you how. If you would like to learn more, or if you have any questions or comments about this blog post, do not hesitate to contact our Yacht Management specialists, or call us at (954) 900-9968.