Aircraft Financing

In article .com,
"Robert M. Gary" wrote:

Its amazing to me that some people finance their personal aircraft. The
monthly costs associated with owning an aircraft are so massive I can't
imaging servicing a loan on top of that.

-Robert, M20F


Forgive me for not being rich!

--
Chris Schmelzer, MD
University of Arizona, UPH Kino

Chris Schmelzer wrote:

In article .com,
"Robert M. Gary" wrote:

Its amazing to me that some people finance their personal aircraft. The
monthly costs associated with owning an aircraft are so massive I can't
imaging servicing a loan on top of that.

-Robert, M20F

Forgive me for not being rich!

Robert indicated that he *cannot* imagine servicing a loan on top of
monthly ownership costs. Doesn't come across as rich to me. rimshot

At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him (in the US) and because
he is able to receive a larger return on his current capital than the cost
of financing.

--
Peter
























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Peter R. wrote:

At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him (in the US) and because
he is able to receive a larger return on his current capital than the cost
of financing.

I suppose this is a business aircraft? Us peons can only deduct loans on our
houses. Of course, you can take out a loan on the house and use the money to buy
a plane, but that's not exactly what most people mean by financing an aircraft.

George Patterson
Give a person a fish and you feed him for a day; teach a person to
use the Internet and he won't bother you for weeks.

George Patterson wrote:

I suppose this is a business aircraft? Us peons can only deduct loans on our
houses. Of course, you can take out a loan on the house and use the money to buy
a plane, but that's not exactly what most people mean by financing an aircraft.

No, I was referring to the accelerated depreciation that the Fed currently
allows. I wasn't even thinking about deducting the interest on the loans.

--
Peter
























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Peter R. wrote:

No, I was referring to the accelerated depreciation that the Fed currently
allows. I wasn't even thinking about deducting the interest on the loans.

Then wouldn't he make even more if he bought the plane outright?

George Patterson
Give a person a fish and you feed him for a day; teach a person to
use the Internet and he won't bother you for weeks.

George Patterson wrote:

Then wouldn't he make even more if he bought the plane outright?

Most likely, no. Given that the cost of money is around 6% give or take a
few tenths, someone with that much money will be better off investing the
cash and financing the aircraft.

Once the aircraft purchase is made, the Feds will then allow this
individual to take accelerated depreciation (largest the first year, and
then a bit smaller until the aircraft is fully depreciated five years
later) on the purchase price of the aircraft, not the equity (or lack
thereof).

There are caveats, of course, but the strategy above will probably be the
most financially advantageous for someone with the cash to be able to cover
the complete purchase price of an aircraft.

--
Peter
























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"Once the aircraft purchase is made, the Feds will then allow this
individual to take accelerated depreciation"

True, but financing has nothing to do with accelerated depreciation,
does it? I have a student (and fellow Mooney driver) who just bought a
Hummer and a Corvette last year for just this reason. He's a home
inspector and can write off the vehicles because he travels around the
state in his work.

-Robert

"At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him "

Only if you can consider it a business expense.

"Robert M. Gary" wrote:

"At least one very wealthy person I know finances his aircraft because
owning an aircraft is a large tax deduction for him "

Only if you can consider it a business expense.

Someone with enough money to purchase a high performance aircraft for cash
would have tax accounting resources at his/her disposal to be able to
structure the purchase as a business purchase.

--
Peter
























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I've got plenty of resources but I have yet to find a legit way to call my
flying a business or create a business that I could use the pane for. I
wanted to do a rent a wreck at FBO's w/o a courtesy car but I can't find
insurance.

Victor J. (Jim) Osborne, Jr.


Someone with enough money to purchase a high performance aircraft for cash
would have tax accounting resources at his/her disposal to be able to
structure the purchase as a business purchase.
--
Peter