The latest tax-code-overhaul news from Washington, D.C. has many taxpayers here in the USA questioning what the real-world impact will be. Since this legislation drastically impacts our private aviation industry, jetAVIVA is bringing clarity on the changes for aircraft owners and buyers.
We had a Q&A session with Daniel Cheung from Aviation Tax Consultants, jetAVIVA’s Strategic Tax Planning partner, and here’s what he had to tell us.
Q: Why is this proposed legislation important to the Aircraft Sales Industry?
A: If you are considering the acquisition of an aircraft for business use, you could depreciate 100% of the cost of the aircraft immediately in the first year of ownership. Example: With marginal tax rate at about 40%, a taxpayer can realize $800,000 in income tax savings by purchasing a $2M aircraft.
Q: How far along are the proposed changes in Congress?
A: Both the Senate and House have passed the legislation, and the bill is headed to President Trump’s desk now, expected to be signed by the end of this week.
Q: I’m only interested in purchasing a pre-owned (used) aircraft. Could I still take advantage of the tax reform?
A: Yes, this applies to both new and pre-owned aircraft purchases.
Q: Is there a purchase price point above which the tax advantage is phased out?
A: No, there is no cap or phase-out to the deduction.
Q: I’m in the process of purchasing an aircraft by end of 2017. Is there any benefit to me now?
A: Yes! There is an exciting proposed provision that can help taxpayers who can close on an aircraft acquisition on or before December 31, 2017. By closing and placing a business aircraft in service before the end of 2017, a taxpayer could immediately depreciate 100% of the cost of the aircraft on his or her 2017 income tax return.
Q: Ok, I want to purchase an aircraft ASAP. What do I do?
A: Great! First, contact jetAVIVA for guidance on the acquisition process and a determination on what plane best meets your mission requirements (email@example.com, +1.512.410.0295); you can look at our inventory here. Next, contact Daniel Cheung at Aviation Tax Consultants to get your tax planning in order (firstname.lastname@example.org, 800.342.9589).