Catamaran Business Ownership
Catamaran Guru has been at the forefront of developing and operating the “Yacht As A Business”, or for us, “Catamaran As A Business” concept. We have not only advocated it to our clients, but have personally benefitted from this program. We found that most yacht owners use this program as an avenue to acquire the cruising catamaran of their dreams for retirement at a huge discount. Others, like ourselves, use the yacht charter revenue together with the business tax deductions to reduce the costs of owning a very nice yacht that we enjoy now.
Whatever your reason, 
Catamaran Guru’s team of experts can set up your yacht charter business in compliance with tax authorities to suit your individual financial and personal goals.
Watch our in-depth interview with one of our yacht-as-a-business boat owners. He shares details and his experience about owning a charter yacht and working with Catamaran Guru. He is candid about how the yacht charter business program he chose is working for him and talks openly about the challenges of charter boat ownership, tax advantages, actively managing the business, and his first year revenue and profits.
You, too, can work with Catamaran Guru to discover the pitfalls and get expert advice when you work with us.
What Is A Yacht or Boat Business?
A yacht or boat business is 
a fairly simple concept and is structured much like any other for profit business. By placing a yacht into a corporation (usually an LLC) and operating it actively for profit, either directly or through a third party management company, the owner is able to generate substantial tax advantages that further offset the cost of ownership. For U.S. buyers who are in high income tax brackets, this is definitely an option of ownership that should be explored.
The tax benefits must be carefully planned and documented to make sure that the business activity can withstand scrutiny. There are very specific rules and requirements that need to be complied with in order to meet the standard of actively operating a business for profit and taking tax advantages.
The goal is to structure your boat business in such a way that you have the intent and ability to make a profit! What you CANNOT do, is structure this business with a flawed business plan of “limited charter” and purposely run it at a loss to avoid wear and tear on your boat while offsetting the cost of ownership with business tax deductions. You CANNOT “pretend” to be in business! However this program, when done correctly, offers the least expensive alternative to own a boat!
How to Set up a Boat as a Business
This is a very basic overview of how to set up a boat business and qualify for tax advantages. Before you make the decision to purchase a yacht, consult with us to figure out if this scenario will be suitable for your situation. There are many things to consider. We can discuss all scenarios with you and tailor the program for your personal situation.
- Figure out the size, type, and configuration of boat you plan on buying
- Decide on the destination or location you want to operate from
- Establish a business purpose – education charter, dive and adventure charters, exclusive luxury charter etc.
- Figure out what your expected revenue and expenses will be
- Create a business plan
- Create a business entity like an LLC or other pass-through entity for your business
- Plan your tax strategy. The business tax advantages should directly offset the income from your boat business activity as well as the taxable income from any other active source including your regular job (W2 income). Our business plan highlights the tax advantages available to you through the yacht as a business plan. That way you can adjust your withholding and use the tax advantages to offset cash flow immediately!
- Consider your ultimate goals and exit strategy and plan for it
- Create a marketing plan for your business – website, social media, introduce your boat to charter brokers, attend boat shows
- Charter management – It is best to team up with a management company to help manage your boat and establish a clientele if the boat is in the Caribbean or Bahamas
You can purchase your yacht to your specifications including an owner version layout, set the yacht up as a business, operate it with the help of a charter company anywhere in the world, and have your yacht at least partially or fully paid off at the end of the contract period by applying business revenues and tax advantages.
But do not be fooled. You cannot dump your yacht in a charter fleet for 5 years while collecting a guaranteed monthly income. This is deemed “passive income” and does not qualify you for the section 179 rule and tax advantages. Once your “Yacht As A Business” is set up correctly, you stand to benefit greatly from this concept, but it does require work on your part.
What Is Section 179 Business Tax Deduction?
People seem to think that the Section 179 deduction is some complicated tax code, but really it is not. Essentially, Section 179 of the IRS tax code allows businesses to deduct operating expenses and depreciate the qualifying equipment purchased or financed during the tax year. Typically, when a business buys new equipment, the purchase price can be depreciated using the MACRS scale which is an accelerated depreciation schedule.
The original target of this legislation was much needed tax relief for small businesses – and millions of them are actually taking action and getting real benefits. So, if you are in the market for a new yacht, the Section 179 rule should definitely be a part of your yacht-buying strategy.
According to this law, when used as part of a business, you can legitimately divert some of the taxes that you’re already paying into the sailing vessel. This in turn, creates equity in your new yacht. Therefore, buying a new yacht and placing it in charter service as a business, makes total sense to reduce cost of ownership and turn tax advantages into an investment. It is vitally important the business is set up correctly and the operation is structured to qualify for the tax benefits and remain in compliance going forward.
Understanding Section 179 Business Tax Deduction
*The U.S. Congress has halted the Section 179 roller coaster of the past recent years by making the Tax Deduction limit permanent. The limit was raised to $1,160,000. This is good news for yacht businesses, as the owners and their tax advisers now know early in the year that the deduction will be there for them and they can plan accordingly.
*This information is general in nature and purchasers are encouraged to seek experienced legal counsel in yacht acquisition planning and implementation. Catamaran Guru is not a licensed tax attorney or CPA and is not qualified to give legal advice, but we can put you in touch with experts who are.
Section 179 Tax Deduction Limits for year 2023
Deduction Limit: The maximum deduction for equipment purchased/financed and placed in service by 12/31/2023 is $1,160,000. Businesses can deduct the full cost of equipment as an expense.
Limit On Equipment Purchases: Business owners may spend up to $4,050,000 on equipment, new or used, and claim the full Section 179 deduction. Beyond that amount, the deduction is reduced dollar-for-dollar. This stipulation is to ensure that small businesses, not large corporations benefit from the deduction. For 2022, this spending cap for equipment is $2,700,000.
Example Of Section 179 At Work
To take advantage of the 2023 deductions, you must purchase or finance the equipment and place into service by 12/31/2023. Form 4562 covers this deduction
Equipment Purchases:
$1,200,000
First Year Write-Off: ($1,160,00 max 2023)
$1,160,000
80% Bonus Depreciation Deduction:
$32,000
Normal First Year Depreciation: (20% in each of 5 yrs on remaining amount)
$0
Total First Year Deduction: ($1,160,000 + $32,000 + 0)
$1192,000
Cash Savings: ($1,192,000 x 35% tax rate)
$417,200
Lowered Cost Of Equipment After Tax Savings
$782,800
*The above information is an overall, “simplified” view of the Section 179 Deduction. For more details on limits and qualifying equipment, please contact us directly about the variety of yacht ownership programs we can help you evaluate.
*The above information is an overall, “simplified” view of the Section 179 Deduction. For more details on limits and qualifying equipment, please contact us directly about the variety of yacht ownership programs we can help you evaluate.
Bonus Depreciation from 2023
Bonus depreciation comes into play if the Section 179 limit has been reached. The 100-percent depreciation will stay in effect until January 1, 2023, when the first-year bonus depreciation deduction will decrease as follows:
- 80% for property placed in service during 2023
- 60% for property placed in service during 2024
- 40% for property placed in service during 2025
- 20% for property placed in service during 2026
TWO YACHT OWNERS IN THESE PROGRAMS, GIVE THEIR PERSPECTIVES
Co-Management Business Program with
Guaranteed Income
Yacht as a Business Program
Crewed Yacht Charter opportunities
- Recover taxes paid in past years to offset the cost of the yacht purchase. Learn more about Yacht as a Business & Tax Advantages.
- Cover all the costs of ownership including the mortgage payments with income and tax advantages – the boat pays for itself!
- Enhance your lifestyle with owner use of the vessel and enjoy the pride of ownership
- All models available in this program
- Virgin Islands, Bahamas and USA locations
- “Owner Operator” option available for those who want to make a career change and be involved full time
Learn more about our Crewed Yacht Programs >> Interested? Give us a call 1-804-815-5054 or email us.
WORK WITH OUR YACHT OWNERSHIP SPECIALISTS
How Can Catamaran Guru’s Team Help You?
Catamaran Guru’s 
Team Is Recognized As Yacht Business Program Experts. If you are serious about creating a yacht business, consult with the Catamaran Guru Team! If we assist you throughout the whole process, there are no additional costs to you, the buyer!
If you are a US tax payer, enjoy sailing and yachting, and want to own your own yacht at a substantially reduced cost, this program will work for you. Catamaran Guru’s team will work with you and your tax professional to qualify your “Yacht Business” to legitimately take advantage of tax deductions available to you. Although the acquisition of a new yacht may be an effective business tool to take advantage of these tax rules, the tax benefits must be carefully planned to make sure that it can withstand scrutiny.
This is where Catamaran Guru’s team can be of great value to you!
- We guide you on your selection of the yacht to purchase and advise you through the buying process
- This business yacht ownership program is designed for flexibility to enable the owner to choose various yacht models and layouts including owner suite in some cases, upgraded equipment, multiple worldwide locations and flexible owner use. We will guide you to make a good choice to suit your individual goals.
- Once you’ve decided on a yacht to purchase, we will help you set up your “Yacht As A Business” and structure it to comply with IRS tax rules. This will ensure that all allowable business tax deductions, advantages and yacht charter income, will largely cover the cost of boat ownership.
- We will help you find a placement with a suitable charter management company. We have extensive experience in the charter management arena and will make sure that you and your charter company is compatible. In our experience, yacht charter management together with active participation by the owner is a great way to reduce the cost of yacht ownership. It is the perfect opportunity for anyone looking to own a new yacht at a substantially lower cost!
When You Work With Our Team
- You get the most complete yacht ownership program available, including a 5-year projection, tax schedule, and business plan
- We show you how to set up your yacht charter business to be in compliance with current tax laws.
- We guide you on how to qualify for tax advantages that can offset your ordinary income.
- We familiarize you with the current tax laws and how they apply to your particular situation.
- We discuss and plan your exit strategy
- We guide you if you choose to upgrade to a larger yacht within this structure
- We show you how to make your yacht be part of your retirement plan.
- We help you understand the difference between a Charter Company Guaranteed Income Program (passive) and Yacht As A Business program (active participation)
We Work With Top Catamaran Brands and First-Tier Charter Companies
- Catamaran Brands: Catamaran Guru can offer you access to some of the top brands of yachts in the world like Fountaine Pajot, Lagoon, Bali Catamarans, Xquisite Yachts, and others.
- Charter Companies: We offer the added luxury of making it possible for you to place your new yacht into service at charter bases in multiple locations around the world through affiliations with reputable charter companies like Catamaran Charters, Dream Caribbean Blue, Virgin Islands Yacht Charters, Cruise Abaco and others
The Catamaran Guru is a brand-independent yacht brokerage working with various charter management companies and yacht brands to bring our boat-buying clients the programs and boat models that are best for their situation and goals. Catamaran Guru is no longer affiliated with Dream Yacht (DYC).
Contact Us For a Consultation
There is a lot of information in these pages as we tried to make it as comprehensive as possible. But there is a lot to absorb so you may need someone to help you sort through it all. Plus there are always questions that deal specifically with your personal situation.
Contact us for a comprehensive consultation. Our services come FREE if we represent you during your yacht-buying process.
BUSINESS YACHT OWNERSHIP REFERENCE MATERIALS
FAQ & Common Misconceptions About Yacht Ownership
We find that explaining what this program entails is easier for yacht owners, their accountants, and other financial advisors, if some common misconceptions and questions are addressed. This list gives a clear and uncomplicated picture of the program. Read more about yacht ownership facts and fiction.
How To Set Up A Yacht Business To Comply With Tax Laws
There are many things to consider and we give you a basic overview of how to qualify for tax advantages. Before you make the decision to purchase a yacht, consult with us to figure out if this scenario will be suitable for your situation. We will advise you on what size yacht you qualify for and what charter company will work for you in which location. We can discuss all scenarios with you and tailor the program for you and your family.
- How to set up your Yacht Business
- How To Operate A Legitimate Yacht Charter Business
- Track Your Business Activity with the Harvest App on Your Mobile
Section 179 Deduction Explained
This article explains exactly how section 179 works and how it affects boat owners. Read more about Section 179 deductions for boat businesses.
Compliance Issues For A Legitimate Yacht Charter Business
While there are many skeptics and detractors to operating a yacht as a small business, we know that if it is done correctly, with a sincere intent to create a small business, which will either be profitable in the short term or in the long term through a paid-off asset acquisition, it is the correct business strategy for a yacht owner to reduce the cost of ownership. Read more about overcoming yacht charter business compliance issues.
Charter Boat Owners Win IRS Challenges
The number one objection from CPAs is that our business yacht management program is a passive activity and will not be deemed active participation. They contend that it can be very difficult for a boat owner to prove active participation in a boat business and qualify for small business and section 179 tax deductions. However, in 2015, a couple won their case in Tax Court on passive vs. active participation. Their success validates the model that Catamaran Guru uses when advising boat buyers regarding charter boat ownership.
- Read more about the IRS case and how this charter boat owners won
- And for another court case discussing material participation in a boat business, see Kline vs IRS.
Section 179 Tax Advantages & Related Court Cases
We have seen many yacht businesses operated in charter programs very successfully around the world as small businesses by our clients. Offsetting the cost of ownership is a sound business strategy especially in the yacht charter business. However, there are many regulatory challenges to a yacht charter program, including complex tax laws, IRS regulations, active participation rules, profit motive and other business considerations.
The Court cases below illustrate the tax implications of yacht charter operations. Read about boat business tax advantages.
BUSINESS YACHT OWNERSHIP SUCCESS STORIES
These are the websites of some of our owners already in the yacht business program. They have enjoyed tremendous success by following our advise and complying with the rules. We add yacht businesses like these every day and we can help you do the same!
- sailluna.com: Luna is a Lagoon 450 SporTop that operates in the Caribbean as a crewed charter yachts in the BVI.crewed yacht. Nim and Fabiola are one of our great success stories and is one of the most popular
- catamaranguru.com: Our own previously owned catamaran, Zuri, a Lagoon 450S, was in the program in the U.S. mostly doing instructional charters and exhibits at boat shows and demonstrations for prospective buyers.
- sailallende.com: This Fountaine Pajot Helia 44 is in Crewed Yacht charter in the BVI. This young couple is making big waves in the industry with exceptional service and have become leaders amongst their fellow crewed boat crews. Kristiann and Graham are also heads the CCCYA, the only industry representative specifically for term charter yacht owners, owner-operators and yacht owners’ representatives in the Caribbean.
- BigNauticharter.com: Big Nauti is a Bali 5.4 that operates luxury crewed charters in the BVI. It is one of the most fun boats to charter!
- Belle Vie: Belle Vie is a Bali 4.8 and broke all records in her first year of charter in 2020. Owners Greg and Christina, operates the boat as a business in crewed charter and is doing extremely well.
- Dream Caribbean Blue: Greg and Christina (owners of Belle Vie) have done so well that we have invited them to become part of this community becoming one of our boutique yacht charter management company partners. They serve a clearinghouse for many of our boats in the USVI and offer a complete and comprehensive yacht management service. They manage many of our 44ft to 54ft crewed boats in business. Check them out!
- ftmcharters.com: The Voyage 500 and her crew/owners is one of the most successful crewed boats in the BVI with numerous awards for excellence!
- irishroversailing.com: UPDATE, RETIRED. This Fountaine Pajot Lipari 41 operated between Annapolis in the summer and the Bahamas in the winter as a very successful bareboat business. They have completed their five years in the program and is now operating a sailing school out of New Jersey.
Boat Business Ownership Resources
- Section179.org
- Section 179 Tax Deduction Calculator
- Form 4562 covers this deduction
- Overview of Tax Relief Act Of 2010
- Full Text of Tax Relief Act Of 2010, H.R. 6467
- Checklist for Vessel Purchase
- Active vs. Passive Activity
- Section 168
- Boat as a Second Home
*This information is general in nature and purchasers are encouraged to seek experienced legal counsel in yacht acquisition planning and implementation. Catamaran Guru is not a licensed tax attorney or CPA and is not qualified to give legal advice, but we can put you in touch with experts who are.
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