Buy your Cat in 3-4 Years?

[dworkman]

Our family of four will be looking to cruise again in 3-4 years (fall 2017 or 2018) and instead of obsessing over boats for sale during the next 36 months, I thought there might be someone here who has the same time horizon for completing their journey.

We'll welcome the latest member of our family in October, and we figure this amount of time to be about right for us to cast off.

We cruised as a couple from FL to the BVI on a Leopard 38 in 2008 and always wanted to do it again when we had a family. We loved our L38 and would look at one again for certain. The performance was not as good as we had hoped, so I would prefer something a little bigger for that reason alone, maybe a 42-45, but nothing bigger than that. Has to be a production cat with good resale potential, prefer 2000-later. The more cruising amenities the better, but bare bones is fine too. I would meet anywhere in the Caribbean, but home base is Tampa Bay area (Clearwater) where we have free dockage. Budget is around $200k, for the right boat, we could stretch a little more.

I know selling a boat can be a pain: the showings, cleaning, upkeep, insurance, all that...not to mention pretty hefty brokerage fees if you go that route, so this may be a good fit to avoid one not so fun part of returning.

If nothing else, I hope this post will re-introduce us to like minded folks and help get us through until we can be out there again!

[ArtM]

Originally Posted by dworkman

Our family of four will be looking to cruise again in 3-4 years (fall 2017 or 2018) and instead of obsessing over boats for sale during the next 36 months, I thought there might be someone here who has the same time horizon for completing their journey.

If you are up for a newer boat, you should call up Moorings. You can buy a brand new boat, let them charter it for 4 years paying down your loan on your behalf, then take possession at the end of the four years with a four-year old ex-charter catamaran.

Possible tax breaks MIGHT maybe make this more economically feasible than simply buying a 4 year old catamaran 4 years from now.

As an additional benefit, you get weeks of sailing time on your own boat or another fleet boat every year between now and then.

There are other programs out there. Moorings is the largest that offers guaranteed income, but some other programs are specifically tailored to help you qualify for the tax breaks.

[maxingout]

Good luck on your cruising plans and I hope that you can find the right cat when you want it. The hard part is finding one that is ready to go and that does not need a ton of work done to it.

[12BCruzn]

We are currently nearing the end (we hope) of a major refit on our 2002 Privilege 435 EZ Cruise. We plan on cruising for the next 2 to 3 years. You will certainly be welcome to check her out although I expect we will be looking for more than you're budgeting at this time. We have certainly gone over our budget



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[valhalla360]

Sounds like a tight budget unless you plan on doing a lot of work to get her ready to go.

If you want to check out the moorings, make sure to take the numbers home and go over them in detail. If you go for the "tax advantages", make sure you run them by your CPA. We looked at these several years back and it wasn't nearly the deal, the guy at the boat show made it out to be. If there was so much profit, don't you think they would buy the boat directly and keep the profit for themselves?

I suggest you keep looking and if a deal comes by, check it out and put in a really low offer. If they don't take, it you have plenty of time to find another. If they do take it, you can justify the carrying costs (maintenance, dockage, etc...) for 2-3yrs with the up front savings and you have time to do any projects you think are neccessary before you head out.

[RKsailsolo]

Valhalla has outlined my own approach.


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[ArtM]

Originally Posted by valhalla360

If you want to check out the moorings, make sure to take the numbers home and go over them in detail. If you go for the "tax advantages", make sure you run them by your CPA. We looked at these several years back and it wasn't nearly the deal, the guy at the boat show made it out to be. If there was so much profit, don't you think they would buy the boat directly and keep the profit for themselves?

It is not the deal they make it out to be because they make it sound like you can simply sell the boat for what is owed at the end of the 4 year charter, and it is clear that you cannot because they have MANY 4+ year old boats for sale, and many have been for sale for more than a year.

The tax advantage is not for everyone. You may need to be creative. If you already are in business for yourself, have experience as an entrepreneur, and/or have a solid basis in corporate tax law then you may be in a good position to make it work.

If do choose to go that route, Moorings may not be your best choice. Since you have no active role in the management of the boat, and no risk in the business venture (since the income is guaranteed), there are some tax advantages you will not get. Other firms are around who give you a larger role in the management of your "business" and help you structure the purchase in a way that gets you the best tax benefits.

I do NOT advise that you go to your "tax guy" with this question, or even your accountant because it is not their business to help you construct tax-advantaged businesses, but rather to simply report on the business you already have. A lawyer specializing in business and tax law will be more helpful, though also more expensive. The more information and knowledge you have before you go into his office, the less he will have to tell you, and also the less likely you will say something that he "does not want to hear".

If all that makes your toes curl, then just pucker up and get ready to take it cuz the taxes are a real b*ll buster on direct purchases for personal use.

[dworkman]

Thanks for all the suggestions and advice. We have a few interested people, but I am also going to stay on the lookout for the right one. Budget seems to be realistic. We are looking at the Leopard 42s, I really like the Norseman 430s, and I could probably get by with another Leopard 38. All seem to be right around the $200k mark, and with a few more years, should be a little less.

[rabbi]

A lot of things can happen in 3-4 years. I have no clue if we want to sell again by then. Other who think they will be selling in 3-4 may stretch their budget for a few more years. Or sail to NZ instead of staying in the caribbean.
I think you will have more luck asking the same question again with a 1 or 2 year timeframe.

The budget sounds right for a 10-15 year old 40-42ft cat. My last boat, a 13yr old Lagoon 410 with a ton of gear on board sold for that.

But why not just keep an eye on the usual websites for the next years. Sometimes deals do show up.

[BelizeBound]

Originally Posted by dworkman

Our family of four will be looking to cruise again in 3-4 years (fall 2017 or 2018) and instead of obsessing over boats for sale during the next 36 months, I thought there might be someone here who has the same time horizon for completing their journey.

We'll welcome the latest member of our family in October, and we figure this amount of time to be about right for us to cast off.

We cruised as a couple from FL to the BVI on a Leopard 38 in 2008 and always wanted to do it again when we had a family. We loved our L38 and would look at one again for certain. The performance was not as good as we had hoped, so I would prefer something a little bigger for that reason alone, maybe a 42-45, but nothing bigger than that. Has to be a production cat with good resale potential, prefer 2000-later. The more cruising amenities the better, but bare bones is fine too. I would meet anywhere in the Caribbean, but home base is Tampa Bay area (Clearwater) where we have free dockage. Budget is around $200k, for the right boat, we could stretch a little more.

I know selling a boat can be a pain: the showings, cleaning, upkeep, insurance, all that...not to mention pretty hefty brokerage fees if you go that route, so this may be a good fit to avoid one not so fun part of returning.

If nothing else, I hope this post will re-introduce us to like minded folks and help get us through until we can be out there again!

I just order a Lagoon 400 S2 $103,000 down w/order $180,000 when delivered to BVI in December.... You have 12 weeks availabilty, 2 of them in season/year. We're doing this because we can't retire to Belize for 3 years. We'll live in our condo in Belize for 2 years until the 5 year term has ended with DYC, the Charter company & Pay the Purchase option of $1.00 to own boat outright.... Also, there are 36 Locations worldwide where you can use your 12 weeks/year..... They say if it's too good to be true........ Well I haven't found ANYTHING yet that doesn't make this a "Win-Win Win" Scenario

[valhalla360]

Originally Posted by ArtM

It is not the deal they make it out to be because they make it sound like you can simply sell the boat for what is owed at the end of the 4 year charter, and it is clear that you cannot because they have MANY 4+ year old boats for sale, and many have been for sale for more than a year.

The tax advantage is not for everyone. You may need to be creative. If you already are in business for yourself, have experience as an entrepreneur, and/or have a solid basis in corporate tax law then you may be in a good position to make it work.

If do choose to go that route, Moorings may not be your best choice. Since you have no active role in the management of the boat, and no risk in the business venture (since the income is guaranteed), there are some tax advantages you will not get. Other firms are around who give you a larger role in the management of your "business" and help you structure the purchase in a way that gets you the best tax benefits.

I do NOT advise that you go to your "tax guy" with this question, or even your accountant because it is not their business to help you construct tax-advantaged businesses, but rather to simply report on the business you already have. A lawyer specializing in business and tax law will be more helpful, though also more expensive. The more information and knowledge you have before you go into his office, the less he will have to tell you, and also the less likely you will say something that he "does not want to hear".

If all that makes your toes curl, then just pucker up and get ready to take it cuz the taxes are a real b*ll buster on direct purchases for personal use.

Creating a tax-advantaged buisness is usually a good way to lose more money than you gain. You set up a buisness to make money and then take advantage of the tax rules to get as much back as you can. You don't set up a buisness to take advantage of tax rules and then hope you make money.

Of course the sales pitch will go on about being sophistiocated in setting up a tax advantaged company that can't go wrong. It's a standard marketing technique. You don't want admit to not being sophistocated. That's why I suggest taking it home and bringing a proffessional in to look it over. It gets you away from the sales pitch which is very carefully crafted so it seems like they have an answer to all your questions. Your accountant should be quite capable of pointing out the obvious errors in the sales pitch or you should be looking for a new accountant.

This isn't to say buying a charter boat is always a bad idea but as the old saying goes, if it seems to good to be ture...it probably is. I wouldn't count on much more than a break even scenario with maybe a few cheap charters.

If it was half as profitable and guaranteed as the salesmen I've talked to claim, the company would be buying the boats directly.

[Palarran]

Originally Posted by dworkman

Our family of four will be looking to cruise again in 3-4 years (fall 2017 or 2018) and instead of obsessing over boats for sale during the next 36 months, I thought there might be someone here who has the same time horizon for completing their journey.

We'll welcome the latest member of our family in October, and we figure this amount of time to be about right for us to cast off.

We cruised as a couple from FL to the BVI on a Leopard 38 in 2008 and always wanted to do it again when we had a family. We loved our L38 and would look at one again for certain. The performance was not as good as we had hoped, so I would prefer something a little bigger for that reason alone, maybe a 42-45, but nothing bigger than that. Has to be a production cat with good resale potential, prefer 2000-later. The more cruising amenities the better, but bare bones is fine too. I would meet anywhere in the Caribbean, but home base is Tampa Bay area (Clearwater) where we have free dockage. Budget is around $200k, for the right boat, we could stretch a little more.

I know selling a boat can be a pain: the showings, cleaning, upkeep, insurance, all that...not to mention pretty hefty brokerage fees if you go that route, so this may be a good fit to avoid one not so fun part of returning.

If nothing else, I hope this post will re-introduce us to like minded folks and help get us through until we can be out there again!

Sure, we can talk. Read my blog and posts here on Cruisers Forum and you'll get a feeling of who I am. What I'm really looking for is a minority share holder (buy in for $5k) who would use the boat for a minimum of 3 weeks per year over a 5 year period. The rate would be about 1/2 the price of a charter cat, but Palarran isn't your regular old x charter model.

Think about it and if interested send me a pm

[ArtM]

Originally Posted by valhalla360

Creating a tax-advantaged buisness is usually a good way to lose more money than you gain. You set up a buisness to make money and then take advantage of the tax rules to get as much back as you can. You don't set up a buisness to take advantage of tax rules and then hope you make money.

I guess you're not getting the point about creating a tax advantaged business. The profit comes FROM the tax advantage. The tax advantage is what MAKES it profitable, whereas it might otherwise not be profitable.

Also, profit is not the only reason to create and operate a business. Nobody is suggesting this as a way to maximize profit.

This is why you don't ask your accountant. Ask a lawyer, or read the tax law yourself.

Remember, you'll be dead someday. After that, it won't matter if you recovered your depreciation expense.

[scarlet]

Originally Posted by ArtM

If you are up for a newer boat, you should call up Moorings. You can buy a brand new boat, let them charter it for 4 years paying down your loan on your behalf, then take possession at the end of the four years with a four-year old ex-charter catamaran.

Possible tax breaks MIGHT maybe make this more economically feasible than simply buying a 4 year old catamaran 4 years from now.

As an additional benefit, you get weeks of sailing time on your own boat or another fleet boat every year between now and then.

There are other programs out there. Moorings is the largest that offers guaranteed income, but some other programs are specifically tailored to help you qualify for the tax break.

I just want to say that my husband and I looked very closely at this option and came to the conclusion that it was definitely not what it was cut out to be.

[ArtM]

Originally Posted by scarlet

I just want to say that my husband and I looked very closely at this option and came to the conclusion that it was definitely not what it was cut out to be.

There are other programs besides Moorings that are more uniquely tailorable to individual needs.

My main concern with Moorings right now is that the boat depreciates too quickly for the recovery period, resulting in a large number of Catamarans not operating, not being sold, and probably on the edge of bankruptcy...

hey....


Anyway, I believe that could be fixed if Moorings adjusted their plan to 6 or 7 years, but they're not going to do that until they have to - which might be sooner rather than later.