When it comes to owning a business aircraft, there are several tax benefits that a business owner can take advantage of. However, these benefits are highly dependent on how the aircraft is used and how ownership is structured. If you’re a business owner considering an aircraft purchase, it’s important to be aware of the potential tax benefits available to you, as well as the rules and regulations governing their use. In this blog, we’ll explore some of the advantages of owning a business aircraft and what you need to know to take advantage of them.
Navigating Tax Benefits for Business Aircraft Owners
One of the primary tax benefits of owning a business aircraft is the ability to deduct the full cost of the aircraft from federal taxes if used for business purposes. This includes the purchase price of the private aircraft, as well as any upgrades or modifications made to it. Additionally, owners can deduct depreciation expenses for new or used aircraft over a period of time, further reducing their tax burden. Operating costs such as fuel, maintenance, insurance, and hangar fees can also be deducted when the aircraft is used for business purposes. However, it’s important to note that the IRS has complex rules governing how much the aircraft must be used for business for these deductions to be applicable. For example, if the aircraft is used for personal purposes as well as business, only the portion used for business purposes is eligible for deductions. Furthermore, the IRS may audit your records to verify your claims, so it’s important to keep accurate and detailed records of the aircraft’s usage. By taking advantage of these tax benefits, business owners can save a significant amount of money and improve their bottom line.
Business aircraft owners can take advantage of the depreciation deduction, which allows them to deduct a portion of the aircraft cost over a set period of time, depending on factors like the aircraft’s useful life and depreciation method used. Under the Tax Cuts and Jobs Act, owners were previously able to deduct 100% of the cost in the year of purchase, but this provision ended in 2022. Currently, owners can deduct up to 80% of the price in the year of purchase.
However, there are requirements and limitations associated with the depreciation deduction. If the aircraft is used for both business and recreation, only the portion of expenses related to the business use can be deducted. Additionally, there are limits on the amount of depreciation that can be claimed each year, and the amount that can be deducted depends on the aircraft’s useful life and other factors. Furthermore, owners may need to recapture some of the depreciation deductions if they sell the aircraft for more than its depreciated value. It’s crucial to consult with a tax professional to ensure compliance with all of the requirements and limitations associated with depreciation deductions.
USAF: Your Partner in Aircraft Ownership
If you’re considering purchasing a business aircraft, financing through USAF could be a viable option. USAF offers loans to fit any budget, making it possible for more people to own an aircraft. Whether you’re looking to buy a new or used aircraft, USAF can help you finance it. With competitive interest rates, flexible payment terms, and a simple application process, USAF can make financing your aircraft a hassle-free experience.
Getting pre-approved online is fast and convenient, giving you an idea of what financing options are available to you before you start shopping for an aircraft. You can also speak with one of our financing experts who can guide you through the application process and help you determine the best financing option for your needs.
By financing your aircraft through USAF, you can take advantage of the tax benefits of owning a business aircraft while making manageable payments that fit your budget. And with our exceptional customer service and support, you can rest assured that you’re in good hands. If you’re interested in financing your aircraft through USAF, contact us today to learn more about our financing options and how we can help you achieve your aviation dreams.