The purchase of a luxury yacht is a big decision, and with it comes a process that should not be embarked upon alone. Our team here at 212 Yachts is composed of experts from different areas of the yachting world. We combine to provide a comprehensive understanding of this industry. When deciding to purchase a luxury yacht, it is vital to make sure that you understand everything that this decision entails. Aspects such as tax, insurance, ownership, and registration. It is essential to work alongside your trusted team of professionals, to guarantee that you make the correct decisions. Contact us today in order to kick-start the process.
This is a major moment. Whether this is your first yachting purchase or you’re an experienced buyer, this is a big step in your life. It is a major investment that should be tailored to your personal financial situation. We will aim to ensure that you are maximising the reach of your investment. Especially regarding your cash flow, lifestyle and tax saving opportunities.
Why to consider financing
The manner of purchase will vary for different people. For those looking to avoid the incursion of interest and debt, outright purchase of the yacht may be the best option. However, there are also many reasons to consider financing, such reasons being tax benefits and liquidity preservation.
A customised yacht loan will be tailored specifically to your personal finances and investment preferences. As well as the prevailing macroeconomic conditions. We recognise that it is of vital importance to be cognisant of interest rates and market risks, and to have certain protective structures in place should market conditions trend unfavourably at any point.
Ownership Structure
As you may know, there are certain benefits to owning your yacht as an entity or organisation. Holding the boat in a trust or some such setup may offer asset protection, allowing you to limit liability in separating yacht insurance from your personal lines. This form of ownership brings with it other benefits as well. Such as greater flexibility in asset protection and the transfer of ownership. This is an area of expertise that requires a knowledgeable team at hand, here at 212 Yachts we will guide you through these processes as your professional advisor.
Setting the Correct Flag
This is another important decision as a yacht owner, which will carry its own set of financial and usage implications. Decisions like hiring international crew, international travel, chartering and so on will all impact your decision on where to register your yacht.
The country of registration will also impose different restrictions regarding where the yacht will be docked at different times of the year. There are many luxury vessels that choose to register with the Cayman Islands, Gibraltar, or the Isle of Man. What is most important is that your advisory team comprehends these subtleties and can help you in making the most informed decision.
Accounting for Yacht Expenses and Taxes
It is important to have a deep understanding of depreciation when purchasing and financing a luxury vessel. Depreciation over time is the most considerable tax. Financing the purchase may be an effective way to equate cost with tax deduction for depreciation.
If you were to use the yacht for chartering, business entertaining or some such enterprising purposes, the vessel may qualify as a business expense. If this were to be the case, you may be able to avail of Section 179. This would provide deductions for depreciation due to commercial purposes. Additionally, if the yacht has the necessary facilities, it may qualify as a secondary home. With this distinction, some of the interest may be tax deductible.
Strategic Purchasing
To conclude, there are many financial strategies to ensure that when you purchase a luxury yacht, you maximise the effect of your capital. Your advisor should assist you in determining the best purchasing decisions for you. Qualification for these various benefits will of course be dependant on your circumstances. The details provided in this article are intended for informational purposes only.
