Learn some tips on purchasing and owning your luxury marine craft.
- New boats have an obvious value, but pre-owned boats are a less clear case, so it’s important to work with an accredited appraiser.
- A professional advisor can help you determine the impact of sales, use, and property taxes on your purchase.
- With proper planning before and after the purchase of your luxury marine craft, you’re sure to enjoy smooth sailing for many years to come.
When it comes to purchasing a luxury marine craft such as a sailboat or yacht, it’s important to ensure that you understand all the implications that come with it before you dive in. The following are some tips that can help you make the financing and ownership process as seamless as possible.
• Get the right value. New boats have an obvious value, but pre-owned boats are a less clear case. Use a Marine Surveyor (appraiser) from an accredited organization such as the Society of Accredited Marine Surveyors, or the National Association of Marine Surveyors, to ensure you’re paying fair value. In addition, a Marine Surveyor, much like a home inspector, can indicate any potential problems or repairs to pay attention to and plan for.
• Use an experienced financial institution with a custom lending team. These teams specialize in working with higher-end financing alternatives, and are accustomed to dealing with complex and unique financial situations. Having the right financing team in place will help to ensure that you get the right loan tailored to your needs.
• Be mindful of taxes. A professional advisor can help you determine the impact of sales, use, and property taxes on your purchase. There are several strategies to minimize these taxes, such as finalizing the sale in a low or no sales tax jurisdiction.
Ownership structure matters
• Consider an ownership entity such as a limited liability company (LLC) or trust. Holding the boat in an LLC or trust, rather than individually, can offer liability protection. For example, these entity structures allow you to separate insurance coverage for the boat from your personal lines of coverage.
• Take advantage of tax saving opportunities. Many boats qualify as second homes, and the interest paid on a boat loan can be deducted on your tax return. Other deductions may apply if you use your marine craft for business purposes. Consult with your tax advisor to determine what may apply in your particular situation.
• Benefit from ownership structures in the estate settlement process. These entities can be structured to avoid the probate process, which can tie up property for months and includes fees that may take up to 5% of an estate’s value.
With proper planning before and after the purchase of your luxury marine craft, you’re sure to enjoy smooth sailing for many years to come.
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.
IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, while this presentation is not intended to provide tax advice, in the event that any information contained in this presentation is construed to be tax advice, the information was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any matters addressed herein.Download Article