Is this a charter company program?
Not it is not. This is a flexible program custom tailored to private owners wishing to offset operating costs and taking advantage of the small business tax deductions.
How much will it cost me?
Assuming that you will finance your catamaran, most financial institutions will require a 20% down payment. The charters will then cover all of your maintenance, insurance and even mortgage loan expenses and some. The rest is profit. After a period of 5 years you have the choice to sell the boat or continue chartering.
Can I take tax deductions?
Well, that is a question for your CPA and most will caution you. However, the law says that if you are actively involved in the business and meet the IRS tests for active participation then it is a small business and you can legitimately take the deductions and benefit from them. Keep a log, record your time and you will qualify. You also need the ability and the intent to make a profit.
Can I use the catamaran if I opt for the Yacht Business Ownership Program?
Yes, you can. Generally speaking, you can use the catamaran 10% for private use. This period of time is usually counted in addition to the asset inspection, marketing and familiarization trips.
Will I trigger a tax audit?
Hardly – as there is no such thing as an automatic tax audit. However, if you follow the basic guidelines for a small business, keep a log and do not abuse the program you should not raise any red flags with the IRS. 1000’s of catamaran owners are enjoying their yachts today, thanks to the advantages that the IRS provides small businesses – and that includes charter businesses.
How do I show a profit?
The law states that you should make a profit 3 out of 5 years – as then the “hobby loss” rule does not apply. This rule is not set in stone however. The actual law is stated in such a way that you need to have “the Ability and the Intent” to make a profit
“Read the article “Active Yacht Ownership for Less” and find out more… (by Gregor Tarjan) Published in WINDCHECK Magazine Oct 2016
