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Old 15-02-2013, 11:04   #46
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Re: Buying a Yacht as an Investment???

The world's economy has changed. There really is no incentive in buying anything that requires a sizable bank loan. Rent, lease or charter is the way to go, now. Save your money! <Good advice...and...it's FREE!> Mauritz
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Old 15-02-2013, 11:11   #47
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Re: Buying a Yacht as an Investment???

I've never heard of anyone purchasing a yacht through a charter management program and making a profit doing so.

For me, owning a boat in charter management is clearly less expensive than chartering for the same amount of time.
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Old 15-02-2013, 11:30   #48
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Re: Buying a Yacht as an Investment???

Let's try a little variation on the theme. Assume you I.D. a boat that is "older" and not depreciating as quickly as new. Might it makes sense to start an LLC to own the boat and run your LLC business out of the boat? (elect/A.C./sail building/etc??) You could then capture the depreciation expense (50% this yr?) on your boat as well as depreciate any business tools. Not a slam dunk but wouldn't this safe a person a few bucks? I'm sure people have tried this, or are doing it...right??
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Old 15-02-2013, 11:39   #49
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Re: Buying a Yacht as an Investment???

Charter places want you to buy the boat, let them get the best years out of it, and then hand you a hard used boat, and the remainder of your new boat mortgage after a couple years. They probably figure you taking a 30 year loan to get their payments to you anywhere near covering your mortgage.

If you want to sail part time, just charter a boat. It's WAY cheaper.
If you want to make good money, own a successful business, or part of several.
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Old 15-02-2013, 12:57   #50
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Originally Posted by Dockhead View Post
So depreciation NEVER "plateaus". Stuff continues to wear out at every stage.
A 30 year old boat in need of a couple of repairs and some paint but basically sound can be flipped like an ugly house for a profit. I've done it.
Having said that, in general you are correct.
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Old 15-02-2013, 13:44   #51
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Re: Buying a Yacht as an Investment???

My current scenario is that I share a 35 year old boat that is fully depreciated with two other people. My share is worth about $18K. The boat is on swing mooring in the heart of Sydney Harbour next to a yacht club of which I am a member and have access, including free parking and tender service. Over the 8 years I've been a partner it has cost me an average of about $3500 per year which includes everything from club membetsip to my share of haul outs and new the rigging. We regularly drive down to Sydney to spend weekends on board and once or twice a year go for longer cruisers. We might spend 25 nights on board each year. Considering a hotel room in the heart of Sydney would easily cost $200 minimum and the boat has basically not depreciated due to good maintenance and minor DIY upgrades, I consider my boat was a decent investment. OK I didn't make money but I did save some. I'm not including the recreational value of sailing - which is huge - but merely the boat as a form of accommodation.
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Old 15-02-2013, 19:40   #52
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Re: Buying a Yacht as an Investment???

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Originally Posted by David_Old_Jersey View Post

......I simply see them using the fact that an item can genuinely have more than a single value, depending on who is valuing it and why.
...
I agree there are other forms of "value" to a boat besides financial. Which is of course how I can justify the piles of dollars I've "invested" into them over the years.

However, the original question using the term "investment" implies financial return and that was the focus of my reply. You could use a broader interpretation of that term to include other benefits-to-owner. Then perhaps it starts to make a bit more overall sense.

I've never gone back and run the overall numbers on boats I've owned (since ROI was never my objective), but that would be an interesting exercise. I suspect I have done better than most because almost all have been used at least part-time commercially (charter/sail school). The boats I have owned have produced quite a bit of revenue, but in the end, I don't believe I have made any significant profit. However, I have accrued a lot of great life experiences which do of course have their own "value".
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Old 15-02-2013, 19:42   #53
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Originally Posted by Eddiefuego View Post
Let's try a little variation on the theme. Assume you I.D. a boat that is "older" and not depreciating as quickly as new. Might it makes sense to start an LLC to own the boat and run your LLC business out of the boat? (elect/A.C./sail building/etc??) You could then capture the depreciation expense (50% this yr?) on your boat as well as depreciate any business tools. Not a slam dunk but wouldn't this safe a person a few bucks? I'm sure people have tried this, or are doing it...right??
You need to explain this better to me. Where is the "income" coming from that you want to use the depreciation and other expenses against? I don't see a real business.
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Old 16-02-2013, 05:10   #54
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Re: Buying a Yacht as an Investment???

Valuation WILL differ depending on the purpose, the valuing party, the valuation method, etc.. And there does not have to be a single price. Not all markets are single price markets, actually, few are.

Even if depreciation 50% on an asset were allowed (depreciation is expected to match the actual use of the asset, in many accountancy rules), I think it will be very difficult to ensure sufficient sales revenue to make this business profitable in the same year! And if there is no profit then why take up a business?

I would think there should be some 'economy for the dumb' or similar free, open source material somewhere, perhaps one google away.

b.
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Old 16-02-2013, 08:08   #55
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Re: Buying a Yacht as an Investment???

Quote:
Originally Posted by Eddiefuego View Post
Let's try a little variation on the theme. Assume you I.D. a boat that is "older" and not depreciating as quickly as new. Might it makes sense to start an LLC to own the boat and run your LLC business out of the boat? (elect/A.C./sail building/etc??) You could then capture the depreciation expense (50% this yr?) on your boat as well as depreciate any business tools. Not a slam dunk but wouldn't this safe a person a few bucks? I'm sure people have tried this, or are doing it...right??
Preface: I am not a tax professional and I don't play one on TV, so consult your accountant before acting on this info, but I do have some experience with this subject.

Depreciation (tax purposes depreciation not actual value depreciation) is indeed a potential advantage of having a boat in charter service. This is easiest to work with if the boat is owned by a legal entity like an LLC. This also in theory limits your personal liability. Be aware that you better really have the boat in charter service and not just pretending....or the tax man may come calling on you (I have been audited over this subject and had my ducks in a row so no problem, but I know of others who did not....that very quickly eliminated any financial advantages of a boat for them and then some).

Assuming USA tax laws. If you put a boat on a 5 year depreciation schedule then per 100K of value that's a 20K adjustment to your taxable income per year (note: despite popular delusion there is in fact no such thing as "write off" -- try finding it in IRS code). However, depreciation adjustments are limited by income. It is unlikely that the boat will generate sufficient income, after expenses, to take full advantage of depreciation so, you need to be producing income from another source. If you have high taxable income from another source then this can really help lower your final tax bill. Otherwise it is just an interesting factoid.
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Old 16-02-2013, 08:59   #56
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Re: Buying a Yacht as an Investment???

If you want to make a million dollars in the yacht business...first go out and get two million dollars.
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Old 24-02-2013, 09:26   #57
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Re: Buying a Yacht as an Investment???

What about living onboard your boat, registering it as a business and do day trips,
weekly sailing trips etc. from anywhere sunny why would that not work?

I know many people who own a boat and make a fair living this way. This is also and investment if youre willing to work and live from your boat. If youre handy you can save costs on maintenance, if youre smart you find a cheap mooring or a slip.

You will be living the dream
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Old 24-02-2013, 09:56   #58
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Re: Buying a Yacht as an Investment???

Here's a typewriter, go be Hemingway. Or, John Clancy. You've got the same tools, what else do you need? Not so easy?

Odds are your "many" friends are barely a handful. Although, IIRC it is Navajo where "many" literally means "more than three". That they've spent years developing what they have. That they're doing something less than 100% correctly or legally, like not reporting their "barter income" and valued received from non-business use of the assets. And that there's more involved than you are seeing, or being told.

Subsist? For a time, maybe. Run a profitable business? Wait till you open up and compete for a share of their market, or any other. You may not be so welcome to the table once you become the competition.
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Old 24-02-2013, 10:37   #59
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Re: Buying a Yacht as an Investment???

Quote:
Originally Posted by richardswart View Post
What about living onboard your boat, registering it as a business and do day trips,
weekly sailing trips etc. from anywhere sunny why would that not work?

I know many people who own a boat and make a fair living this way. This is also and investment if youre willing to work and live from your boat. If youre handy you can save costs on maintenance, if youre smart you find a cheap mooring or a slip.

You will be living the dream
+1!

The dream of being a day-charter skipper and a boat mechanic all-in-one.

b.
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Old 24-02-2013, 16:23   #60
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Re: Buying a Yacht as an Investment???

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Originally Posted by barnakiel View Post
+1!

The dream of being a day-charter skipper and a boat mechanic all-in-one.

b.

Were is the "like" button on this post, ooh no this is a forum not FB
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