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Planning Examples

SMART YACHT BUSINESS

To understand the potential full value to the owner of this program, it is helpful review an example. The same analysis can then be applied to a yacht of your choice to see the results. This example assumes a Jeanneau 449 is purchased and put into charter service in Miami with 14 weeks per year of paid charters and is used by the owner for 6 weeks per year as part of the owner’s own unlimited usage.

The 10 year projection shows all the assumptions including: income, direct expenses, incremental tax rate, inflation, etc for each year and then sums the totals over 10 years at the right side column of the sheet. Please click to see the SMART YACHT BUSINESS 10YR PROJECTION EXAMPLE to view complete details.

In this example, a $73K down payment was made to purchase a $367K Jeanneau 449 mono-hull sailboat with 3 cabins and 2 heads, and 80% of the price was covered by a loan at 5% with a 15 year term. In each year the LLC had a positive operations cash flow averaging $27K. As a result of earnings, depreciation, and sales tax savings, the owner realized:

  • $268K profits after tax
  • $38K tax savings on other 1040 income
  • 10 full years of of 6 weeks per year owner usage

If the owner now decided to settle the $123K loan balance on the yacht, the owner’s net position after 10 years looks like this:

  • -73K$ down payment out-of-pocket
  • -170K$ of loan principal payments over 10 years out-of-pocket
  • -123K$ loan principal pay-off after 10 years out-of-pocket
  • +268K$ LLC profits after tax into pocket
  • +38K$ saved on taxes related to other income into pocket
  • +209K current value of the yacht now 100% owned

The net position after 10 years is +149Kwith 100% yacht ownership and 60 weeks of owner usage.

FOR COMPARISON WITH SIMPLE PRIVATE OWNERSHIP: If the same yacht was purchased for private use only and not utilized in the Smart Yacht Business Program, then then the cashflows for 10 years would amount to:

  • -73K$ down payment out-of-pocket
  • -170K$ of loan principal payments over 10 years out-of-pocket
  • -123K$ loan principal pay-off after 10 years out-of-pocket
  • -$353K$ for interest(after tax), sales tax+direct ownership expenses out-of-pocket
  • +$315K charter savings into-pockets
  • +209K current value of the yacht owned 100%.

The net position is -$195K with 100% yacht ownership and considering the same value owner usage.

Summary: Based on the difference in above net positions after 10 years, the Smart Yacht Program effectively saves this owner $344K versus simple private ownership for the same period!

The next step with projections for the prospective Smart Yacht Business Program participant is to select the yacht they would like to sail and do the math. The yacht and the the math depend on the individual interests and objectives of the prospective participant. Florida Yacht Group can quickly provide projections of all of the above to meet your personal needs. To start this, please register for a web based meeting by going to our Registration page.

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