As long‑time sailors and yacht‑ownership advisors, the Catamaran Guru team knows that combining passion with smart financial strategies is key to making yacht ownership truly attainable. One of the most powerful tools available today is 100% bonus depreciation, newly reinstated and retroactive to January 2025. Here’s how it works—and how our own team, including co-founders Stephen and Estelle Craftoft, have used it firsthand to offset yacht costs. Check out the full seminar in the following video OR highlights in the article below.
What Is Bonus Depreciation?
Bonus depreciation is a U.S. federal tax incentive that allows businesses to deduct the entire purchase cost of qualifying assets in the first year of use, rather than spreading depreciation over many years. Initially introduced in 2002, this allowance fluctuated—until recently, it was scheduled to phase down: 80% in 2023, 60% in 2024, 40% in 2025, and out by 2027.
However, Congress passed new legislation restoring bonus depreciation to 100% for assets placed in service between January 20, 2025 and December 31, 2029
Why This Matters for Yacht Owners
A yacht used in business—most commonly in a charter operation—can qualify as a legitimate business asset. That means if you’ve:
Formed a pass‑through entity (e.g., LLC or S‑Corp),
Used the yacht mainly for business (sales, charters, promotional events),
Kept it “in service” by December 31,
…you can deduct the full purchase price in Year 1. No waiting 10 years, no drilling for deductions.
Example:
Buy a $1.5 million yacht in 2025. Deduct $1.5M in bonus depreciation. If your marginal tax rate is 37%, that’s roughly a $550K immediate tax saving, reducing your effective cost to $945K.
Setting Up Your Yacht as a Business
To make this strategy work, here are the key steps:
Form an LLC or S‑Corp – Enables pass‑through tax treatment, so losses & depreciation flow to your personal income.
Purchase and place the yacht in service before year‑end – It must be available for charter use, even if idle.
Use it actively in business – Charter it, promote it, inspect it, attend boat shows, act as broker. Document every hour via tools like Harvest.
Meet IRS participation tests –
Bareboat: At least 100 hrs/year personally, ideally 150 hrs.
Crewed: 500+ hrs recommended, since the crew works more than you do.
Engage professional management – Reduces hassle, ensures compliance, and provides quality service—a crucial element.
Owning vs. Chartering vs. Selling
Reduces holding costs: Charter income typically covers insurance, maintenance, dockage, etc.—making ownership less expensive.
Personal use allowed: Up to ~10–20% personal use (e.g., familiarization, inspection, demo trips) is considered acceptable with proper documentation.
Exit strategy matters: Bonus depreciation creates a future tax liability (recapture). Common strategies:
Trade‑up to roll gains.
Hold 10 years to qualify for favorable capital gain tax treatment.
Plan exit carefully using boats with strong resale appeal (owner’s cabin, standard engine specs).
What About Used Yachts?
Used yachts now qualify, as long as they are “new to you” and placed in service after Jan 2025. Just ensure your charter operator will accept a used vessel and that the boat is professionally maintained.
| Topic | Details |
|---|---|
| Entity structure | LLC or S‑Corp |
| Deduction applied | 100% bonus depreciation for purchases in 2025–2029 |
| Business use requirement | >50% for charter, promotional, or broker activity |
| Participation tests | 100 hrs for bareboat; 500 hrs for crewed |
| Personal use | Permitted for business purposes (≤ 10–20%) |
| Potential tax hit at sale | Depreciation recapture taxed as ordinary income |
Is This Yacht Charter Business Strategy Right for You?
Consider it if:
You have significant taxable income you want to shelter,
Can structure yacht ownership through an LLC,
Are willing to operate it actively as a charter business,
And want to significantly reduce first-year costs.
That said, it’s not for everyone—so consult your CPA or tax advisor. Thankfully, Catamaran Guru works directly with experts like Glenn Gman to guide clients through every step.
Ready to Get Started?
Here’s what you can do next:
Set your yacht budget and arrange financing (typically 80/20 loan-to-value).
Choose your vessel—new, used, with maintenance history, resale potential.
Select a charter management partner, preferably boutique, experienced, and transparent.
Engage advisors—including CPA, finance, insurance, legal—to finalize setup.
Place yacht in service before December 31, 2025 and document every activity.
At Catamaran Guru, we’ve helped hundreds of families navigate this process—from choosing the boat to chartering, documenting, and maximizing tax benefits—all while enjoying unforgettable sails. We couple real-world experience with a genuine passion for the lifestyle we live ourselves.
Interested in learning more? Contact us, speak with our advisors, visit a charter, and start drafting a strategy tailored to your goals.
Disclaimer: We are not CPAs. This content is for educational purposes. Consult a qualified tax professional before making financial decisions.
