Placing a Yacht into a Charter Fleet
We’d like to call your attention to an excellent overview on charter yacht ownership in the July/ ’12 issue of Latitude 38 in “World Of Chartering,” pages 116-120. Managing Editor, Andy Turpin, provides a well researched “Look Behind the Scenes in the Bareboat Biz,” covering charter boat ownership both locally and internationally.
To pick up where Andy leaves off, we’ll add our never-to-be-humble opinion that owning a charter yacht internationally (Caribbean, South Pacific, Mediterranean, etc.) with the major charter companies is largely a vacation play. In other words, if you have lots of vacation time and frequent flyer miles, this is a great way to own a floating vacation condo with a built-in trading program, have your boat’s mortgage payment and operating expenses covered and receive a modest income from charters for 4-5 years. The downside risk is primarily resale value at the end of your charter contract, as these boats tend to be “charter-centric,” i.e. plain vanilla with too many cabins and high mileage. There’s also generally a glut of them for sale in charter markets. So if you go this way, it’s probably best if you’d like to actually own the boat at the end of its useful charter life.
Owning a charter boat locally is an entirely different proposition. Generally speaking, the arrangement is structured as an equipment rental business wherein the charter company manages the boat for an owner who is often “actively” participating in the running of the business. This is an important point, as active participation may create significant shelter from income taxes which can be applied to ordinary income. Club Nautique’s program is specifically designed with this objective in mind and has stood the test of time for over three decades. Bluntly put, we wouldn’t have a charter fleet if the program didn’t stand up to IRS scrutiny.
Club Nautique is actively pursuing the addition of new Beneteau sailboats and Mainship trawlers into its charter fleet. If you would like to own a new boat, use charter income and tax savings to pay for the majority of it and have a free membership and free use of your boat, give us a call. There are substantial income tax benefits available to qualified owners. Give us a call if you would like more information.