No Employee Business Expenses for Individual Owners: What Light Jet Owners Need to Know
Individuals Owning a Light Jet May See Their Tax Returns Change
Do you try to use employee business expenses to offset costs? Not anymore. Here's what you need to know about writing off expenses as a light jet owner.
Purchasing a light jet
isn't as simple as signing on the dotted line and taking to the skies. You must consider how you intend to use the jet and what that will imply for your taxes.
Ultra-high net worth individuals in North America owned 13,392 private jets
in 2017. That's the highest concentration of light jet owners in any region in the world.
Many of those light jets are for personal use, but many others are small business jets
. Each type has tax implications.
If you own a light jet, here's how your tax returns might change moving forward.
Business Aircraft Are More Affordable
The Tax Cuts and Jobs Act of 2017 is having an impact on the private aviation industry. Businesses and high-wealth individuals are benefiting from the tax cuts. This, in turn, gives them more money to spend on private air travel.
But the Act also changed the way you can claim the use of your light jet on your taxes.
If you purchase a private aircraft for business purposes, you can now write off the entire cost on your taxes. However, there are limits.
This write-off only applies to your first year of ownership. Furthermore, the rules around this write-off are complex. If you use your aircraft for non-business purposes, you may sacrifice your write-off.
Only use your jet for business purposes if you want to receive IRS expense reimbursement.
Employee Business Expenses Are More Complicated Now
Before the passage of the Tax Cuts and Jobs Act, you could take advantage of miscellaneous itemized deductions for your aircraft. This included employee business expenses
in conjunction with IRS commuting rules.
For example, if an employee used your personal aircraft for business purposes, you could write off the cost. Or, if you used your personal aircraft to conduct business, you could write off the cost.
This was a useful deduction for startup owners who wanted an aircraft but didn't want it on the company books. But now, these deductions only apply to company aircraft.
If you personally own a turboprop or light jet, you cannot cite employee business expenses on your taxes. However, if your aircraft is officially owned by your business, you may still be able to claim this write-off.
Entertainment Write-offs Are No Longer Allowed
You used to be able to write-off entertainment expenses related to your business regarding a light jet. For example, if you were to fly to a company retreat to conduct business, you could write-off the cost.
No more. Now, only business-related commuting expenses are eligible for write-offs.
Purchase Your Next Light Jet
Whether you intend to purchase a light jet for business or pleasure, you need to know how it will affect your tax situation. Plan beforehand for how you intend to use the aircraft. Then, stick to your plan so you can claim all eligible deductions and write-offs.
Are you considering a new aircraft acquisition? Don't leave anything to chance. Get a VREF Verified Aircraft Value Report
before making your purchase.