| Charter Boatonomics 102|
The Advanced Course
How you can own a new yacht, make a profit,
have massive positive cash flow, save a
fortune in taxes, & have fun doing it.
In this email, I'll show you how you can accomplish everything on the blackboard above. If in my efforts to be brief, anything isn't clear or if you would like more detail, please feel free to give me a call and I'll gladly go into more detail with you.
|Will Charter Yacht Ownership Work For You?|
Let's begin with 4 qualifying questions:
1. Would you like to own a new yacht?
2. Is your income tax bill (way) too high?
3. Is your free time to use your boat limited?
4. Are you willing to charter your boat to qualified skippers when you're not using it?
If you answered "Yes!" to all four questions, you should keep reading. If not, you may not be a candidate for charter yacht ownership, but please feel free to forward this email to a friend.
Let's make this real from the start. A charter boat isn't going to make you rich. Club Nautique's program recognizes the 800 pound gorilla of boat ownership - the average boat sits in its slip 350 days a year. That's a national statistic that's held true for over 40 years and yes, you did the math right; that's only 15 days a year of use.
Charter yacht ownership is for smart people who want to own a yacht, but recognize it's going to sit in the slip, neglected, most of the time. Club Nautique's program puts an expensive asset to work paying its way when you're not using it by chartering (renting) it out to qualified skippers during during its downtime. So instead of sitting and costing you money, your boat is moving and making you money. By the way, boats are like people, when they move they stay in better shape.
There are other benefits included with the program:
- Club membership, yacht club reciprocity, training, cruises, social activities and other membership benefits are included free for owners with no dues or initiation fee.
- Our professional maintenance crew is looking after your yacht 7 days a week, so you don't have to worry if a storm is coming or it's time for an engine service. Your boat is ready to go when you want to use it.
- The buck stops here. We sell, service, provide warranty support, arrange financing and insurance, ensure the skippers are qualified, take the reservations, collect the fees, inspect for damage and more. In short, we take care of everything so yacht ownership is hassle free for you.
|Follow The Money!|
There are two sources of revenue for charter yacht owners: your share of the charter fees and income tax savings.
As I stated above, charter ownership won't make you rich, but it will typically cover your ownership expenses and help service the debt if you finance the purchase.
Tax savings are where it becomes really interesting, because owning a charter yacht basically means you're in the equipment rental business. And that means you can deduct from your ordinary income (your salary) all of the normal expenses of ownership such as slip rental, maintenance, insurance, mortgage interest, etc. Plus, you can depreciate your boat.
The depreciation deduction can be a huge advantage because you have tremendous flexibility in how it can be structured. In some cases you can deduct 100% of the purchase price (up to $500,000) in the year you take delivery. This could give you a huge tax savings and it can be leveraged. For example, let's assume a taxpayer with a taxable income of $1,000,000 per year, which is a federal bracket of 39.6%, purchases a $500,000 charter yacht and puts the minimum 25% down payment, financing the balance. He can write off the full purchase price of $500,000 which means his taxable income is now $500,000. Multiplied by his 39.6% bracket, that's a tax savings of $198,000 with an out of pocket down payment of $125,000. In other words, he got his down payment back plus $73,000. (The savings are actually greater than this because we left out the state tax savings for simplicity.)
|Decisions, Decisions, Decisions|
1. What boat do you want?
Club Nautique is an authorized charter yacht dealer for Group Beneteau, which is the parent company of Beneteau and Jeanneau. From these two primary brands we can offer the following options:
- Jeanneau motor yachts including the following brands:
Note: not all models available in all locations.
2. Where do you want your boat?
San Francisco Bay
Assuming you live in the area, having your boat in northern California means you have easier access for spur of the moment personal use. Financially is also means you have the ability to front load the depreciation, which could be an important consideration if you're experiencing a spike in your taxable income this year (see the example in the Follow The Money section above).
Our new Puerto Vallarta location offers some awesome advantages to charter yacht owners including:
- No sales tax on your purchase!
- Lots of non-stop flights from major west coast airports for about $400 round-trip and 3-4 hours flying time. Puerto Vallarta International Airport is less than 20 minutes from our charter base.
- Huge pricing advantage. Compared to Caribbean charter bases, the total cost for 3 couples sharing a 45 foot yacht for a week including round-trip airfare is about half - it's like getting the yacht for FREE!
- Guaranteed income options for first year placements.
- Full resort facilities in marina including access to pools, health club, multiple restaurants, luxury hotel, supermarket, hospital, spa, tennis, golf, and yacht club.
- Fabulous cruising grounds well known to cruisers but undiscovered by charter clients, with warm winds, abundant sea life, easy anchorages, great restaurants, beautiful beaches, friendly people and bargain prices.
- Once sales tax restrictions are met (typically one year in Mexico) the possibility of seasonal moves or transit charters generating additional income opportunities.
- Mexico also offers better opportunities for larger yachts (above 50 feet) because of its vacation charter appeal and more relaxed rules regarding passenger limits on crewed yachts.
|It seems early, but tax planning season is here. If you want delivery this year, NOW is the time to act!|
To learn more about how what we've covered here can work for you, give me a call and we'll set up a meeting so you can get all the details you need to make an informed decision. You'll learn why my client list includes Big 4 CPAs, attorneys, and other tax professionals and why Club Nautique's charter boat ownership program is the best possible way to make boat ownership pay for itself.
Club NautiqueOffice: 510-865-4700 x312Mobile: 510-520-7677
Email: [email protected]
USCG Licensed Master #98397
CA Licensed Yacht & Ship Broker #B2819