Raw: [Ultra-rich put off buying yachts, jets in hope of massive Trump tax break if he wins New York Post ] {Article Source: https://nypost.com/2024/04/19/us-news/ultra-rich-put-off-new-yachts-jets-in-hope-of-trump-tax-cut/}
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Ultra-rich put off buying yachts, jets in hope of massive Trump tax break if he wins
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Published
April 19, 2024, 6:00 a.m. ET
The Palm Beach International Boat Show in March was dominated by questions over whether former president Donald Trump could win in November and bring back 100% deductions for yacht purchases.
GREG LOVETT/THE PALM BEACH POST / USA TODAY NETWORK
The very top of the 1% are waiting until after the presidential election to buy big ticket items like jets in the hopes that Donald Trump’s election could save them millions on taxes, The Post has learned.
“I’m waiting until after November,” one bi-coastal source who is looking to buy both a jet and a yacht for his business told The Post.
“If I can save millions on my taxes by waiting a few more months I will.”
Business owners — or even someone who is paid through an LLC as a consultant — can deduct the cost of buying a jet or yacht if it is used for a business expense like flying to meetings or hosting clients.
Separate tax deductions allow them to claim its running costs too.
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Trump told a group of billionaires at a recent Palm Beach fundraiser hosted by hedge fund manager John Paulson that restoring the 2017 Tax Cuts and Jobs Act is a priority, according to CNN.
One of those cuts was 100% depreciation, or deducting the entire cost of a yacht or jet used for business expenses from taxes.
That means a $40 million jet is equivalent to a $40 million deduction from your tax bill — or nearly $15 million in savings given the average tax rate on the wealthiest Americans is 37%.
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President Trump told a group of billionaire donors at a fundraiser in April that restoring the 2017 Tax Cuts and Jobs Act which he signed in the Oval Office just before Christmas that year is a priority if he is elected to a second term. Mike Theiler/CNP/AdMedia
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The Gulfstream G700, a $78 million dollar jet, was just certified by the Federal Aviation Administration in March. REUTERS
The amount someone can deduct from a tax bill for a capital investment — an item like a jet that can help a company’s growth — fell from 80% last year to 60% this year, in line with how the 2017 tax cuts were put in place.
It will drop to 40% in 2025, 20% in 2026, and 0% in 2027 unless the tax cuts are restored.
Trump’s comments behind closed doors have not been mirrored in public so far.
But a source involved in the Palm Beach International Boat Show in March — which showed more than 800 boats and attracted more than 55,000 visitors — told The Post that one of the main topics was whether to wait until after the election.
The boat show didn’t disclose how many sales were made. The yacht and private jet industries are intensely private.
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While the largest and priciest yachts typically attract international buyers less concerned about taxes, buyers in the $45M to $65M range for yachts are more sensitive to outside factors like taxes. GREG LOVETT/THE PALM BEACH POST / USA TODAY NETWORK
“A lot of us are waiting to see what happens in the election… the Republican Party has promised 100% write-offs so that would save companies,” the Florida-based source added.
The prices of jets and yachts seem to show demand is slowing.
In recent months, demand for anything between a super-midsize jet, which can sell for as little as $12 million, and ultra-long range aircraft, which can sell for as much as $75 million, has dipped according to CEO of Mikolay Jet Group Michael Mikolay.
A super-midsize aircraft like a Gulfstream G280 or Bombardier Challenger 300 can fly around 3,500 miles or the distance between New York and London.
An ultra-long range aircraft like a Bombardier Global 6000 or Gulfstream G700 can fly more than 8,000 miles — the distance from NYC to the Middle East.
“Basically, there is more supply than demand right now,” Mikolay said of the pre-owned market in particular.
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The Bombardier Challenger 300 is a super-midsize jet which means it can fly closer to 3,500 miles. Getty Images
Between October 2023 and March 2024, 719 jets were sold — down from 815 jets sold in the same period the year before.
While the largest yachts, which can cost north of $65 million and typically attract international buyers aren’t taking a hit, the market for slightly cheaper boats in the $40 million to $65 million range is softening, super yacht broker Jamie Edmiston said.
A source in the jet space said his business clients — as opposed to those buying for leisure — are more sensitive to tax implications like the rate of depreciation.
“If someone wants to buy his wife a Birkin he’ll spend the money but if he’s looking to buy a jet for his business and he can save millions, he’ll wait,” the source added.
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The Gulfstream G700, which Elon Musk has reportedly bought, has five living areas and can seat 19 people. REUTERS
“Rich people — like anyone else — want to save on taxes and if there is a legal way to do it they will.”
Partner at Soar Aviation Law Amanda Applegate said sales typically fall in the lead up to an election, “I do usually see a slow down every presidential election year” but adds it is more pronounced closer to August.
Chair of Business Aviation and Regulation practice at law firm VedderPrice David Hernandez told The Post he warns clients that waiting for a more favorable tax scheme doesn’t always work out — and that it can result in some sellers charging more.
If you’re rushing to buy a plane at the end of the year, chances are sellers will increase their prices because they know you are desperate,” he adds.
Another chilling factor spooking potential jet buyers, Hernandez adds, is the increase in audits of jet owners that the IRS announced in February.
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The private jet market is showing signs of slowing down as buyers wait to see if they will get a 100% tax deduction from a new Trump administration. UCG/Universal Images Group via Getty Images
“With expanded resources, IRS work in this area [private aircraft] will take off,” IRS Commissioner Danny Werfel said earlier this year.
“These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities.”
The IRS is expected to verify that someone writing a plane off their taxes is actually using it for business expenses — flying to visit clients or a factory they’ve invested in — as opposed to jetting to the Bahamas for a long weekend.
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But Hernandez advises clients that there is no cause for alarm if you’re not doing anything illegal, “If you haven’t done anything wrong, who cares.”
The bi-coastal source who told The Post he is waiting to make a purchase said he plans to buy a yacht and a jet no matter what — he just wants to be smart about timing.
“There is huge value in having a boat… I can have a captive audience on my yacht for three hours who can’t wander anywhere and have to discuss business with me,” he added.
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Filed under
2024 presidential election
audits
donald trump
irs
private jets
private planes
tax cuts
taxes
yacht
yachts
4/19/24
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President Trump told a group of billionaire donors at a fundraiser in April that restoring the 2017 Tax Cuts and Jobs Act which he signed in the Oval Office just before Christmas that year is a priority if he is elected to a second term. Mike Theiler/CNP/AdMedia
The Gulfstream G700, a $78 million dollar jet, was just certified by the Federal Aviation Administration in March. REUTERS
While the largest and priciest yachts typically attract international buyers less concerned about taxes, buyers in the $45M to $65M range for yachts are more sensitive to outside factors like taxes. GREG LOVETT/THE PALM BEACH POST / USA TODAY NETWORK
The Bombardier Challenger 300 is a super-midsize jet which means it can fly closer to 3,500 miles. Getty Images
The Gulfstream G700, which Elon Musk has reportedly bought, has five living areas and can seat 19 people. REUTERS
The private jet market is showing signs of slowing down as buyers wait to see if they will get a 100% tax deduction from a new Trump administration. UCG/Universal Images Group via Getty Images
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