Articles How U.S. Tax Law Could Make Yacht Ownership a Reality: The Smart Way to Buy, Charter and Enjoy

2 Sep 2025 | Industry Insight

Transform your yachting ambitions into a structured and profitable reality.

Historically, purchasing a yacht in the USA has been accompanied by an intimidating tax burden, often discouraging even the most seasoned of buyers. However, recent changes in U.S. tax law have opened the door to a remarkable opportunity. With careful structuring, yacht ownership can now move beyond being purely a personal indulgence and instead become a commercially sound venture with genuine financial advantages.

For many, owning a yacht has remained a distant aspiration. But under today’s rules, that dream can not only be realised, it can be achieved in a smart and financially efficient way.

The New Tax Opportunity Explained

From 2017, the TCJA allowed 100% bonus depreciation on qualifying purchases, including yachts placed into a genuine charter business. That 100% rate was gradually reduced in recent years, falling to 40% for assets placed in service up to the 18 January 2025. However, under current law, 100% bonus depreciation has now been restored for assets placed in service on or after the 19 January 2025.

What Does This Mean in Practice?

If you purchase a yacht and place it into commercial charter service in 2025, you may be able to deduct up to 100% if placed in service on or after the 19 January 2025, applied to the portion of use that qualifies as business activity.

To qualify, the yacht must genuinely be run as a business and marketed, chartered, and managed for profit, not just used privately.

TIMELESS I aerial view

There is also a provision known as Section 179 expensing, which lets businesses deduct the cost of eligible assets up to set limits. In reality, many yacht owners rely more on bonus depreciation, as Section 179 comes with technical restrictions that don’t always suit charter arrangements. To benefit, the yacht must be used for business for more than half of the time in the year it enters service. For example, if your yacht is chartered to paying clients for 60% of its time and used personally for 40%, you may be able to deduct 100% of the 60% business-use portion in year one.

However, if business use ever drops to 50% or below in later years, the tax savings can be repossessed. To avoid this, keeping accurate voyage logs and financial records is essential.

For non-U.S. buyers, there is still opportunity. If you purchase through a properly structured U.S. entity, chartering predominantly in American waters, you can often access the same benefits.

Turning Your Dream into a Business Reality

This opportunity is far from a mere loophole. In fact, it creates a genuine pathway for aspiring yacht owners to launch a commercially viable charter operation, while enjoying all of the perks and advantages that come with yacht ownership. The process begins with purchasing your yacht through a registered company, commonly an LLC or other limited structure, then actively offering it for charter at market rates.

It is important to note that this is not about disguising a recreational purchase as a business. The yacht must be marketed professionally, bookings must be secured at market rates, and operational records must be meticulously tracked and maintained.

This includes:

Income from charters and trip records
Marketing materials and listings
Client invoices and contracts
Crew, maintenance, and operating expenses

Ocean Independence offers comprehensive support throughout this journey, from sourcing the perfect yacht, to charter marketing, compliance, and ongoing management.

Yacht Usage: Balancing Business and Pleasure

Running your yacht as a business doesn’t mean giving up personal enjoyment. You are still able to use your yacht privately for up to 49% of the time, so long as business use remains the majority.

It is important to note that when the yacht is used for personal leisure, those costs cannot be claimed as business expenses. Similarly, the IRS disallows deductions for using a yacht purely to entertain clients socially. By contrast, legitimate charters to paying guests will be categorised as business use.

IRS Hobby Classification: What You Must Avoid

To ensure the activity is viewed as a legitimate business, and not a hobby, the IRS applies a nine-point test. To be treated as a business, you must show genuine profit intent. The IRS looks at several factors, including:

Having a business plan
Marketing the yacht professionally
Keeping detailed records
Spending meaningful time and effort on operations
Earning a profit in at least 3 out of 5 years (a “safe harbour” rule)

To clarify, this doesn’t mean you need to recover the yacht’s full cost in those years, but you must show the potential for ongoing profitability.

The latest rules have created a unique chance to combine passion with practicality. For those ready to take a professional approach, this is a rare opportunity to make yacht ownership not just a dream, but a financially efficient reality.

Please note: Tax laws are complex and subject to change. The level of bonus depreciation available under the Tax Cuts and Jobs Act has been gradually reduced since 2017 and currently stands at 100% for qualifying assets placed in service on or after the 19 January 2025. This information is provided for general guidance only and should not be relied upon as tax, legal, or financial advice. Ocean Independence does not provide tax advice and accepts no liability for decisions made based on this content. To find out more, contact us to discuss purchasing a yacht or to find out more about this unique yacht ownership opportunity.

Enquire now to explore how you can benefit from this opportunity. Purchasing your dream yacht may be closer and smarter than you think.

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Need help or advice?

The yachting journey can be complex with many decisions to be made. Get in touch with Ocean Independence, and one of our specialist consultants will help you make the right choices.