Active Owner Programs

[rkmurphy]

Ok, lets try this question here! I am new to this forum and am interested in anyones experience with one of these programs. After 40+ yrs of work I am on a three year "glide path" toward retirement. Looking at either a FP Lucia 40 or Lagoon 39 for live aboard coastal and island cruising (ICS friendly). Trying to assess getting a new boat and putting it through a program for 3 years and then taking it out vs waiting until retirement and looking for a good used one of recent vintage. Not interested in the traditional charter model- I want an owners version and don't want a ton of use before I "retire it". The Active Owners tax advantages seem about equal to the yearly depreciation of the boat so in some ways it seems "a wash"?. Any experiences to share greatly appreciated!

[StuM]

What's an "Active Owner Program" ?

Google doesn't find many hits on that phrase and what it does find doesn't seen relevant to boat ownership.

[captainjay]

I will try not to be to commercial but I am part of the management team of a charter company in the Caribbean. If you are in the right tax bracket then yes you can offset some of the costs of boat ownership this way and get some good sailing in while your at it. You should know that with the current issues with production capability it will take a year and a half to get a Lucia. The 39 Lagoon has been discontinued and Lagoon has not announced the new 40 yet. No prices, no timeline not even a computer generated picture. The current 400 will be going away very soon. So your three year glide path turns into only having a boat for a year or so before you retire.

My two cents pick an established small charter company with a good history of maintenance and repairs. The big guys all place their emphasis on selling boats and maximizing revenue at the expensive of the owners boats. This is more about getting your boat than maximizing your revenue. If you have any specific questions let me know.

[Breck Sailor]

First, I've not owned a boat, however, I've owned a number of businesses and have a pretty good understanding of tax.

I am considering buying a boat and putting it into a charter program with light charter weeks - similarly to you. So, I don't have the actual experience even though I've spent countless hours considering the options and tax ramifications, and even speaking to my tax support folks (legal and accounting). (I'm really not ready to make that commitment yet for personal reasons - however, considering it for the future.)

Here's my view for what its worth (which may be worth what you've paid me for my advice!). Assuming you set it up the right way as a business, you should certainly be able to offset expenses vs income - with existing tax law (which may very well change, who knows...). I won't go into all the details of what you need to do to set it up as a business - and the various "economic" hurdles you need to go through which are pretty important - I'll assume that you and others know and understand these specifics. If not, I'd suggest that you do that research and never rely on boat brokers who talk of this - they could care less and will have NO skin in your tax game. In any case, that's the basic tax advantage which I think many take advantage of and I think it makes sense and should pass muster if done correctly.

The bigger tax advantage (possibility) with a new boat purchase is a Section 179 deduction. (I also won't go into detail on this - it is even more complex, but has very significant tax consequences for the right persons - and I mean VERY significant positive tax ramifications.)

I think that while many take the 179 deduction, my personal opinion is that this is HIGHLY suspect, unless you are in the boat business as a PRIMARY business (which is almost NEVER). Many owners will tell you (and I believe them) that they have never had an issue with this but I'd question how many have actually been AUDITED - that's the real test and a test that I think many who take this tax advantage might fail, if audited. Which would mean a very large tax recapture, interest, and penalties which would entirely change the tax picture and economics of a boat purchase. With that said, I'm not suggesting that its something you don't do (the 179 deduction) - I'm just saying that I think that's its very shady and you better be ready for the consequences of an audit down the road.

Good luck in your process!