1 week ago
Last Updated: April 19, 2024, 16:39 IST
Washington D.C., United States of America (USA)
A super yacht sails through the harbor in San Diego, California, California, U.S., August 30, 2023. (Reuters)
Wealthy buyers postpone yacht and jet purchases until after election, eyeing tax breaks under Trump's potential second term. Market demand slows
Wealthy buyers in the US are postponing their purchases of high-value items such as jets and yachts until after the upcoming presidential election, as they anticipate potential tax savings under another term of Donald Trump.
This strategy, aimed at potentially saving millions on taxes, reflects a cautious approach among the affluent class, the New York Post reported. “I’m waiting until after November,” revealed one bi-coastal source considering the acquisition of both a jet and a yacht for business purposes.
“If I can save millions on my taxes by waiting a few more months, I will.” The allure of tax deductions for business-related expenses, such as flying to meetings or entertaining clients on yachts, is a key factor driving this decision. Under the 2017 Tax Cuts and Jobs Act, significant tax benefits were afforded to such investments, including 100% depreciation for jets and yachts used for business purposes.
Trump’s recent remarks at a Palm Beach fundraiser hosted by US hedge fund manager John Paulson underlined the importance of reinstating these tax cuts, highlighting the potential for substantial savings. However, the public stance on tax policies remains unconfirmed, with Trump’s comments behind closed doors yet to be echoed in public discourse.
The impending election has cast a shadow of uncertainty over the purchasing decisions of affluent individuals, with discussions at events like the Palm Beach Boat Show revolving around the potential impact of the election outcome on tax policies. The Republican Party’s promise of 100% write-offs has fueled speculation among buyers, prompting many to delay their purchases until after the election, according to The Post.
Market indicators suggest a slowdown in demand for luxury items, with prices of jets and yachts reflecting the shifting dynamics, the report said. While demand for larger vessels remains relatively stable, the market for slightly more affordable options in the $40 million to $65 million range is softening, according to industry experts.
This approach extends beyond tax considerations, as potential buyers navigate additional factors such as market fluctuations and the risk of increased audits by the Internal Revenue Service (IRS). The recent announcement of heightened scrutiny on private aircraft owners has further fueled apprehensions among prospective buyers. Despite the uncertainty, industry professionals stress the enduring appeal of luxury assets like yachts, which offer unique opportunities for business networking and client engagement.
“There is huge value in having a boat,” remarked one buyer, highlighting the captive audience and conducive environment for business discussions aboard a yacht. As the US Presidential election draws nearer, the affluent class in America remains on its toes, weighing the potential benefits of tax savings against the uncertainties of the market and tough regulatory landscape.
