Jan 11, 2021
Benefits of Starting a Yacht Charter Business
Reasons to Start a Yacht Charter Business
If you own a yacht, chances are you aren’t always using it. In yacht ownership, you have two choices. You can either keep your yacht a private vessel only for your use, or you can decide to charter your yacht and open it to paying guests. The decision to make your yacht available for charters should not be taken lightly. It takes a steady stream of funds to operate a yacht charter business and you will have to hire a full-time crew to take care of the vessel and a rotation of charter guests. However, there are multiple benefits of starting a yacht charter business.
Decrease The Cost of Yacht Ownership
Chartering your yacht is a popular and effective way to offset the costs associated with purchasing and owning a yacht. A private yacht essentially represents money down the drain as you will need to continuously provide funds to maintain it and keep it operating. On the other hand, a charter yacht makes money as guests pay to use it. Charter revenue (combined with tax savings) provide a significant offset to ownership costs and can even cover your expenses. Therefore, chartering your yacht makes yacht ownership substantially more affordable.
Is Yacht Chartering Profitable?
So, can you make money chartering a yacht? The answer is yes. Paying guests generate charter revenue for your yacht charter business. However, is yacht chartering profitable? That is an entirely different question. A portion of charter revenue will have to go toward expenses such as crew salaries, management rates, dockage fees, fuel costs, and more. Depending on how rigorous your yacht’s charter schedule is, the amount of revenue it generates may only be enough to cover expenses. The majority of charter yachts do not make a profit. However, if done strategically, your yacht charter business can make a profit.
Yacht Charter Tax Advantages
Yacht owners often choose to make their vessels open for charters because of the substantial tax benefits. Tax laws that benefit small business can be applied to your yacht charter business to significantly decrease yacht ownership costs. If you choose to operate your yacht as a business, there are a few rules and requirements it must comply with in order to qualify for these yacht charter tax advantages. There are two deductions that charter yachts generally qualify for.
- Modified Accelerated Cost Recovery System (MACRS) Schedule – Yacht charter businesses can deduct all ownership costs including yacht maintenance, berthing, insurance, crew, and related expenses. The price of new equipment purchases can also be depreciated using the MACRS schedule.
- Section 170 Business Tax Deduction – A substantial portion of the purchase price of your charter yacht can be deducted in the year you bought the vessel according to Section 179 of the Internal Revenue code. A special depreciation allowance also applies only for the year your purchase your yacht and is an additional deduction you can qualify for after your section 179 deduction.
Yacht Management South Florida, Inc. specializes in complete yacht care. As such, we offer international marine concierge services from our South Florida marina and offices. Experienced yacht managers will work hard to ensure the smooth operation of your yacht charter business. From daily management and crew placement to itinerary planning and regular maintenance schedules, contact us today to see how you can benefit from our first-class management program!