Yacht Depreciation

[emnick]

If a yacht broker has a sales yacht from new as a demonstrator, can they claim a depreciation allowance from the taxman for the yacht.

I presume that they can claim back the VAT and what ever they use as kit on it, I know that when I had company vans I could claim up to 25% per year and write it down to nothing I wonder if yachts are the same.

On that note is there a league table of second hand yachts that depreciate more than others, one would suppose that supply & demand may play a part e.g.Bavs and I know some boats are now more expensive than when they were new.
I ask as I may buy a demonstrator soon. Thanks

 

[Twister_Ken]

On the dem boats I've looked at the rule of thumb seemed to be a very few K off the list price, but all the fitted showroom options and extras thrown in pretty much for free.

However, different brokers, different strokes.

 

[Whitelighter]

There are a few issues here.

Firstly, the dealer wont have paid VAT on the boat when they bought it from the manufacturer, as there use is directly concerned with their business. This is why most ex-demo boats (and cars for that matter) are priced +VAT.

Secondly, write down allowance on large depreciatable assest depends on the catagory of that asset. Cars and vans for example can be written down at £3000 or 25% of its value every year, in the case of assets for which £3000 is less than 25% of its new cost to the business, the additonal depreciation can only be offset against profit after the asset has been disposed of.

Any equiptment bought such as plotters, radar, lines, fenders, coffee cups etc etc will also have had the VAT reclaimed - again as the company can show them as a legitimate business cost. This is why demo's will be loaded up to the gunwalls with dealer fit kit - the cost less VAT makes them reletively good value.

As to what depreciates, it is such a small market that a Glasses Guide or Parkers Guide for boats is just not feasable. There is not a big enough pool of data to accurately account for anomilies.

 

[MoodySabre]

In the end they will pay tax or get tax relief on the difference between what it costs them and what they sell it for. There are no tax allowances that are nor adjusted back to actual profit/loss once the assets is sold.

Perhaps they but them a bit cheaper and keep them for a year or two then sell them at cost. That's what happens with cars - NatWest managers used to have to change cars every three months.

 

[andy_wilson]

Trade purchase of yachts are not immune to VAT, whether for resale or demo. They have to pay it to the importer or manufacturer, and claim it back against VAT due to the treasury.

 

[Sailfree]

The best discount is always obtained from a desparate seller!

2007 berthing bills are just landing on their doorsteps right now!

Look for a person who bought his new fully loaded dream 1 yr ago and discovered that sailing for him was not all he thought it would be and SWMBO wants that extension to the house now!

On production boats I would expect a 10% depreciation in the first year, about 5% per year for the next few yrs but you may get up to say 7% discount on list price when haggling for a new boat anyway.

Good luck.

 

[Birdseye]

When I was looking at new boats a couple of years ago, I questioned the brokers about depreciation. They all said that Benny and Bav depreciated considerably at first - like 15% year 1 and 10% each year until stabilising somewhere round year 5. Bearing in mind that these people were trying to sell me a boat, it seems likely the depreciation figures will be low

Queue loads of people saying they sold their Benny at a premium. They may well have - there's one born every day! But what we are talking here is generalities and the above is what several brokers said. Incidentally, they all agreed that the best bet depreciation wise was HR

My guess is that its like cars - the second hand price on an ex demo boat bears no relationship to what the dealer says about part ex / second hand prices.

Personally, I wouldnt consider an ex demo boat at less than 15% discount on new,

 

[tcm]

the notional tax break - if any- would only apply if they hadn't sold it tho.

Are you hoping that the broker mighttake a lower offer because he can "write it off against tax" ? If so, utterly brilliant. In fact, the less he sells it to you for - the *greater* the tax write-off! Hurrah. If he's got any sense he'll give it to you for nothing.

 

[Bajansailor]

This is just a general observation re depreciation, and does not take into account if a boat was a demo vessel or not.

I have generally found that with older vessels, they seem to keep their value pretty well - eg if you bought a sailing yacht 10 years ago and looked after her well, you should be able to sell her today for what you bought her for, as the cost of a new vessel today (if they are still being built) will have gone up considerably with inflation.

Some popular classics like Contessa 26s have increased in value faster than the rate of inflation. Whereas Westerly Centaurs were averaging around 10-12k on the second hand market 12-15 years ago, and are generally still for sale for this ballpark amount.

However you look at it, I think we can still conclusively say that a boat is a much better investment than an AWC (average white car) any day!
Keep this argument up your sleeve for HWMBOs and SWMBOs who are trying to find reasons for not acquiring a boat......

 

[PeterGibbs]

For the purposes of doing a good deal, I would suggest that if you're looking to buy one of the big fleet boats - Beneteau etc, - you look to the country of origin, and talk with a large dealer. At boat show time he will be looking to move a lot of hulls to get his volume discount; this is when you strike - get lots of extras for little on cost, and a show discount of 5-7%. However, remember the cost of transport from the factory , commissioning, antifouling etc, can easily add £5-9k to the list price.

A one year old from new vessel is usually a very good deal becasue all the launch costs have been eaten by the first purchaser, and much of the added equipment will come for a heavy discount - because most of it is unsaleable anywhere off the boat. If you don't want the equipment - blue water stuff etc - then it's not such a bargain, of course.

The equipment on a boat several years old is in market terms, virtually worthless, the sails may not have much life left etc. Look to the engine - more than 5000 hours and there's little left there either, even if it has the great name of Volvo attached!

Continental brokers often can be relied on to insist that vendors make their vessels up to a good standard before they will accept them for sale. - eg new sails, engine refirb. This never happens in Blighty!

VAT: boats are not relieved of inputs and outputs. If a dealer takes a boat on his books as stock he will pay VAT to the supplier and claim it back on sale. If it's a piece of equipment
for use in the firm, subsequently sold on when not required,
VAT is paid to the supplier and claimed back from C & E. But on disposal, presumably at a depreciated price, VAT will be payable on the disposal price and claimed back in the resale price.

A typical broker acts as an agent and VAT is not his concern, it has been discharged in the initial purchase, like car dealerships, and is inferred in the market price.

Boat depreciation seems rather peculiar - not at all like cars which all depreciate fast from new, only classics picking up value but some years down the line. There is a slew of Westerley, Moody type boats that at about 10+ years of age appear to hold their cash value: but underneath it is a cse of mounting running costs as offset - rigging, sails, motors, electronics all fading rapidly - so the loss is counted more in cash out than capital value.

As an owner for 28 years, I KNOW, new is crazy and chartering is best, but what the hell.....

PWG

 

[Koeketiene]

[ QUOTE ]

As an owner for 28 years, I KNOW, new is crazy and chartering is best, but what the hell.....


[/ QUOTE ]

I agree with you: new is crazy.
But chartering is best /forums/images/graemlins/confused.gif /forums/images/graemlins/confused.gif

Example:
we owned our previous boat for 5 years. Bought her for 50K & spent 20K on a refit. Sold her for 67.5K. Out 2.5K over 5 years - 500 p/a.

Mooring/marina costs: on average 2.2K p/a
Insurance: 450 p/a

Yearly running costs: 500 + 2,200 + 450 = 3,150

We spent on average 90 days afloat: 3,150 / 90 = £35 per day

Let charter beat that!
AND we sailed when we wanted to.

 

[Richard10002]

[ QUOTE ]
As an owner for 28 years, I KNOW, new is crazy and chartering is best, but what the hell.....

PWG

[/ QUOTE ]

If it flys, [--word removed--]* or floats, RENT IT!!!

 

[ridgy]

I think you would have to admit that 90 days afloat, or 1 day in 4, is very much the exception than the rule....you're very lucky. For the vast majority of AWB owners, the poster was correct!