Let's be honest, yachts are expensive.
Tiger Woods purchased his 155-foot yacht Privacy for $20 million—and that’s cheap by swanky yacht standards. There's also the average annual cost of operating your yacht which is 10% of the purchase price. That means that Tiger Woods is putting something on the order of $2 million per year into keeping his Privacy.
As of 2018, the most expensive yacht is the History Supreme, sporting a $4.5 billion price tag. Not too shabby, huh?
What About You?
While it's nice to dream about these megayachts, you can still be a yacht owner with a 20-foot boat! But the real question is, how much do they actually cost?
Plan to put at least 10% down on your yacht and pay somewhere around 5% APR for 10 years. That means an average entry-level 30-foot yacht costing $100,000 is going to incur monthly payments of nearly $1,000 after you make your $10,000 down payment. Assuming you're going to take out a boat loan, your debt-to-income ratio should be below 40% in order to qualify for one.
The Cheaper Way to Go Yachting
For years, many savvy yacht buyers have been significantly reducing the cost of owning a yacht by placing their yacht in charter. This can allow you to write-off the purchase price of your yacht and deduct most ownership expenses like insurance, slip fee, and maintenance, against your employment income. In addition to providing a tax shelter, your yacht will also generate charter income to help offset other ownership expenses. Read more about chartering your yacht here.
The Bottom Line
Owning a yacht takes money, but placing your yacht in charter can generate significant tax benefits. We've seen some of our yacht clients reduce the costs of purchasing and owning their yacht by OVER 50% through a combination of tax deductions and charter income. If you have any questions or would like further information on purchasing a yacht, don't hesitate to contact us or call us at (213) 260-0155.