As a business owner/self employed in the US, you must be able to tell us more about these depreciation rules that make everyone buy expensive new aircraft (plural of aircraft is aircraft ;)). I think I have asked why that would incite anyone to buy a new airplane in another thread already, but am still intrigued.
then why would you go for an SR22 when you could have a few year old TBM or Meridian instead?
If you asked me why do I keep the TB20 and don’t buy a DA42, my several reasons would start with not wanting to re-do four checkrides. And to pass a checkride with a “real” examiner you normally need to do some training. If (in Europe) the training is required to go via an FTO then that is a barrel you really really don’t want to end up being bent over. Whereas I could buy an SR22 and jump in, insert the key, and fly it away. I already know (I did ask for some previous thread here) that the insurance premium would be identical to mine (well, for same % of hull value, anyway).
And most pilots with 1M+ are in an age group where they don’t want to deal with this stuff 
The training issue is that much bigger with a TP. And mandatory if you want to get insured.
The people I know or have met personally with TPs or jets are mostly a lot younger than me (=60) and managed to get themselves located on an adequately thick money stream early enough in their lives 
I think this is the main issue which determines the size of the TP market, which has not changed much over decades.
$1 Million in the Bank will generate roughly $25K/ pretax invested in US treasuries. I just don’t see how $1-2 million gets you to an SR-22 or turboprop unless you plan to live in your plane in retirement.
$1-2 million invested at the average return of the DJIA two years ago would have bought the SR22 outright.
Yes; very true. The FTSE rocketed, especially after brexit. But any mug can make money in a bull market, and this doesn’t happen every year I don’t think the demand for aircraft loans exists only in a bull market, so the Q is what really drives it?
I have known some “finance industry people” and the younger ones seem to have one thing in common: they like being highly geared. Everything is bought with borrowed money as a matter of principle. Consequently when the crash comes, the guy who was “worth 100M” ends up with just the one Ferrari
Anyone who can time the market properly (and sufficiently levered) can afford an SR22, in fact, a turbo prop would be slumming it!
Rwy20 wrote:
As a business owner/self employed in the US, you must be able to tell us more about these depreciation rules that make everyone buy expensive new aircraft (plural of aircraft is aircraft ;)). I think I have asked why that would incite anyone to buy a new airplane in another thread already, but am still intrigued.
Under US tax rules aircraft used Part 91 for business can benefit from accelerated depreciation. So the business can deduct the purchase price over I believe it was 5 years from their taxable income.
The change in December actually allows full expensing, ie the price paid for a used or new aircraft used for business can be fully expensed in year 1.
This is obviously a system which encourages business users to buy their own aircraft by lowering the upfront cost essentially by your marginal tax rate.
In European countries, if you are able to hold an aircraft in a business, you can only depreciate it over a far longer period most typically related to its useful life.
Does the USA require the aircraft to be wholly an exclusively used for the business? There has to be some test like that otherwise everybody would be doing it
Peter wrote:
Does the USA require the aircraft to be wholly an exclusively used for the business? There has to be some test like that otherwise everybody would be doing it
It has to be predominantly business use but i think this is interpreted less strictly than in Europe. And obviously a tax deduction only helps if the business would otherwise have taxable profits.
Assuming the business owner earns enough to pay income tax, then a self employed one can deduct the plane from his personal tax, no?
Here in the UK, deducting depreciation (capital allowances) on aircraft from corporation tax (or income tax if sole trader) is seen as extremely provocative by HMRC.
