Aircraft Financing

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

"Robert M. Gary" wrote in message
ups.com...
"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.

I believe that automobile have a celing on deductibiity. I'd guess people
got tired of subsidzing BMW's and Hummers. IIRC, the most you can deduct is
the cost of a average mid-sized car. Afther that, you're on your own.

"I believe that automobile have a celing on deductibiity"

Actually, its the other way around. A Hummer of a giant SUV gets better
deductions than a small car because of its weight. I guess the IRS
considers only real workers drive cars that heavy. Personally, if
its got leather interior, its probably not an industrial vehicle.

"Robert M. Gary" wrote:

True, but financing has nothing to do with accelerated depreciation,
does it?

True. I guess I got carried away in justifying why someone would purchase
an expensive aircraft with financing.

--
Peter
























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