Diksia.com - Owning a yacht can be a dream come true for many people, but it also comes with a hefty price tag and a lot of expenses. However, there are some tax advantages that can make yacht ownership more affordable and rewarding. In this article, we will explore the tax benefits and deductions available for yacht owners and buyers, such as Section 179, bonus depreciation, and charitable donations. We will also explain the rules and requirements for each option, and how to maximize your tax savings.
Section 179: An Immediate Deduction for Yacht Purchase
Section 179 of the Internal Revenue Code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. This applies to vehicles, including yachts, that are used for business purposes more than 50% of the time. The maximum deduction for 2023 is $1,160,000, reduced by the amount the purchased property costs exceeds $2,890,0001.
To claim this deduction, you need to use your yacht for business purposes more than 50% of the time. This can include chartering, renting, or using it for meetings, entertainment, or transportation. You also need to keep a log of your business and personal use, and document the expenses related to your yacht. You can multiply the cost of your yacht by the percentage of business use to get the amount eligible for Section 1792.
Section 179 can help you reduce your taxable income and lower your tax liability in the year of purchase. However, you need to be aware of the recapture rules. If you sell or stop using your yacht for business purposes within five years, you may have to pay back some or all of the deduction you claimed3.
Bonus Depreciation: An Additional Deduction for Yacht Purchase
Bonus depreciation is another tax benefit that allows businesses to deduct a certain percentage of the cost of qualifying property in the year of purchase. Unlike Section 179, bonus depreciation does not have a dollar limit or a business use requirement. However, it only applies to new or used property that is placed in service for the first time by the business4.
