Boat as a Business
I'm one step closer to buying. I've two questions that I'd like any and all input to.
1. I'm considering buying a boat with the Jeanneau dealers in Annapolis and putting my boat into charter as a "boat as a business." Here's the skinny:
Buy your boat. Incorporate yourself. Let the dealers charter it as little or as much as you want. Charter company handles all maintenence and keeps the boat tidy. You write off the whole adventure 'cause you're now a business. After running the numbers, it seems legit. Any inputs?
2. Jeanneau dealer, of course, says Jenneaus are better than Catalinas, Beneteaus, and Sabres. Says the glass in the hull is better. I know boat type is very personal, but I'd take any thoughts on comparisons of the four.
I'm off to pick up my kids...won't be back on-line till this evening, but will read all inputs tonight.
Cliff, what you are suggesting is in fact legal as long as all transactions are at "arm's length" and you make an honest effort to run the business as a business. If you don't make a profit in 3 years out of 5, the IRS may disallow the business and declare it to be a hobby.
If you don't have an accountant (a CPA, tax accountant, or IRS EA "enrolled agent") you want to talk to one and get the scoop. Don't expect any of them to talk to you until May 1st, it's tax crunch time now and then they all go away for two weeks.<G>
Aircraft owners do the same thing. You are the stockholder in the charter company, and when you want the boat you charter it and pay for it just like any other cash customer. The problem is, someone is going to have to make the active effort to place the boat in charter and keep it booked. "Dealers" don't care about that. Charter companies often have their own fleets and want you to buy into their programs, with their boats. So you'd need a charter management company that would professionally manage, maintain, and book your boat. And of course, commercial insurance and so on.
Whether the after-tax bottom line will or won't be for you is something you need to go over with your accountant, and if your tax situation isn't complicated (or rich<G>) enough to have an accountant, the charter business probably isn't for you. If chartering was always so lucrative--the charter companies would use their own capital for it, instead of asking outsiders to buy boats and lend them to charter use.
Remember, after five years of charter, your boat may need a total refit and show twenty to twentyfive years of "normal" use. You've got to run those expenses, and the time for routine maintenance layups and anticipated damages, repairs, etc. along the way.
Why not buy the boat through Moorings and have them do all the work for you?
I'm sorry... he said the glass is better??? Oh that is right, I forgot. Jeauneau uses that new French Fibergalss designed by their space program - which was how they put all those people on the moon. I forget these things sometimes.
You need to go look at all the boats and sit on them and find the one that feels comfortable. Then you need to start looking through it and figure out how all the comforts of home (that you want) are going to fit. Rememeber that with any salesman, if his mouth is moving, he is lying.
I do not work for Catalina, only do a tech write-up for them.
Here, read this thread. It was written by a master (smile). Use it as a baseline for looking for a boat and buying one. http://www.sailnet.com/forums/buying...sing-boat.html
I had a similar idea and actually did it only with a rental house. In November the house was 8 years old. Now the house shows 2 times the wear of others, 'worst home in the neighborhood', it needs new everything. the House has been on the market 4 months with NO offers, none, I’m listed at 20% below the appraised value.
Bottom line; ALL my 'acquired' equity is going to be spent fixing the place up, just to sell it for what I owe the bank. A ‘Cash at signing; offer is not generating offers, I am being forced to repair everything. Looking back, considering the yearly upkeep, mortgage paid when house was not rented. I’ve lost thousands of dollars, and I won't even discuss the headaches this 'investment' has caused and is now causing.
As for trusting a company to manage your boat, If they are like my rental agency, they are going to do sloppy work, perform poor upkeep if any and charge you well above average prices.
do what you want:
I just want you to know this is only going to be a yearly tax write off because, you are going to be loosing money.
Why not just use the standard tax deduction for a second home and save yourself all of the renter/ broker related headaches ?
A boat is not something you want to "own" and let other people trash when you aren't on it. If you don't want to spend the money to buy a boat or can't afford it you should go charter somebody elses boat.
Owning a charter boat is like marrying a prostitute.
I find it odd that Jeanneau would have better fiberglass than Beneteau, which is their parent company. I would highly suggest going to find another person to talk to about getting a boat. If he's going to lie about something as basic as the materials of the boat, do you think he is someone you want to trust or spend a lot of money with???
It would help if you said where you want to sail, and what kind of sailing you want to do. Buying a boat and then chartering it out to help pay for it really doesn't make sense if your real goal is to go bluewater voyaging... since most of the boats that are suitable for bluewater voyaging, aren't generally used as charter boats.
However, if you are going to go coastal cruising, which is really what most of the Beneteau, Jeanneau, Catalina and Sabre boats are best suited for... then that is another story entirely.
However, the wear and tear that occurs on a chartered boat is significantly higher, even with a decent maintenance program. Many people who charter boats are less experienced sailors. Also, they have less motivation for keeping the boat in good working order... since they do not own it.
Finally, the cabin layout for most boats in the charter business, once they get above 35' LOA, is a three-cabin layout. While this is good for the charter boat business, it may be less than optimal for use by a family or couple sailing the boat. The aft cabins in the three-cabin layout are much smaller than that of the two-cabin layout boat, with smaller berths and significantly less storage.
Creative approach to offset some of the expenses that coincide with boat ownership, but certainly not for everyone. Most sailboat owners develop an indescribable love for their boat, transcending to more than a just another material possession.
Consider how these emotions may be effected by the multitude of nicks, scratches and cracks to the hull's surfaces, the rapid deterioration of sails and rigging, due to improper care. What about the inevitable, permanent stains occuring on the upholstery - and to the master berth?
Personally, considering how much I love my boats, I could never deal with that experience . . . and never could my wife either.
Just another point of view.
Right on....right on.....the wisest thing I read here this week...
I broke my boat, and kicked my own ass...imagine someone else breaking it...I'd murder......
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