5 Best Tax Benefits of Owning a Private Jet in 2022

The best, most luxurious way to travel is to have your own private jet. Jet ownership can be a great investment, providing a major tax break. You may think that this tax benefit isn’t a big one, but it is. In fact, it’s the biggest tax benefit of owning a private jet. If you use your jet more than 50% of the time for business purposes, you can deduct the entire cost of your jet as a business expense. 

So whether or not you’re hopping in your Cessna, Gulfstream or Learjet for business or fun, owning a private jet has benefits that extend outside of just being able to customize your aircraft or having the freedom to pick your own in flight menu. 

In fact, the tax benefit of owning a private jet or aircraft can be significant. The most obvious tax benefit is the depreciation deduction. The IRS allows a taxpayer to deduct the full cost of a private jet or aircraft in the year it is placed in service. There are also a number of other tax benefits to purchasing a private jet in 2022, which we’ll cover now. 

100% bonus depreciation for purchasing

As the demand for private jets has grown over recent years, some tax law changes have been put into place. These changes started at the end of 2021, so 2022 would be your last chance to take advantage of the 100% bonus depreciation for jet purchases.

One of the best ways to reduce your tax liability is through depreciation. Reports state that  depreciation is an expense taken over time to recover the cost of investments in long-lived assets. In other words, it’s a non-cash expense that allows you to deduct costs associated with your aircraft over time (such as fuel and maintenance). 

When it comes time for you to file taxes each year, this deduction will save you money in the amount equal to part of your plane’s value on paper. Depreciation will generally allow you to write off 1/5th of your aircraft’s value per year for five years; however, depending on how much money has been spent on aircraft maintenance and upgrades throughout those five years versus buying it brand new may affect its depreciation schedule. 

For instance: if after four years of ownership only 40% of its original purchase price ($4 million dollars) remains due to expenses related to maintenance and upgrades not covered by insurance ($1.6 million dollars), then rather than depreciating $800k per year over five years the plane would instead be able to claim depreciation starting at $1.6 million dollars in year one down until nothing remained following year four (assuming no more expenses were incurred).

Tax-exempt use of aircraft

If you own a private aircraft and use it exclusively for business or charitable purposes, you are allowed to exclude the cost of its operation from your federal income tax. In order to take advantage of this exclusion, the private aircraft must be owned by either a: 

• Corporation (C corporation or S corporation)
• Partnership
• Trust

Please consult your accountant or tax advisor for further guidance in this manner as there are also some varying factors that are dependent on the state you live in. 

Reduced maintenance costs 

If you own a private jet, the government considers maintenance expenses to be tax deductible. This includes fuel, oil, and other consumables for the aircraft. It also includes minor and major repairs. Crew member salaries are considered maintenance expenses as well. 

Since your private jet is an asset, according to the Internal Revenue Service (IRS), you will depreciate the cost of your jet over time. Maintenance expenses can reduce your income by up to 100% in some cases. 

Reduced operational costs for business flights 

If you’re a business owner, owning a private jet can help you significantly reduce the cost of flights for your employees. Because flying on commercial planes is so expensive, it’s often necessary to fly business class and first class for more important personnel to ensure that they arrive at their destination feeling energized and ready to work. This can add up very fast.

For example, say you have ten employees who need to travel from New York City to Los Angeles twice per year; the cost of sending them all business class would be over $200,000. That’s less than what it costs to purchase and operate an entire small-to-medium sized private jet! Of course, even those with the money might not want to buy their own plane–but if you did then you could cut down on operational costs enormously.

By owning your own plane instead of renting one or buying tickets every time an employee needs a flight (which can include upcharges like baggage fees), companies are also able to save money in other ways that are harder to quantify. 

For example, eliminating delays can improve productivity and reduce stress levels for both passengers, staff, and pilots.

Tax-free sale of the aircraft 

The sales and use tax exclusion is an often-overlooked benefit by those who may be new in the ways of private jet ownership. States impose a sales or use tax whenever a person purchases a product within the state, but many states recognize that imposing such taxes on private jet purchases would create a significant burden on the purchasers. 

As such, states exclude private jets from these taxes. Keep in mind that it isn’t always black and white when determining whether your aircraft is subject to sales or use tax. Some states exclude certain types of aircraft while others do not. 

It’s important to consult with experts when making this determination so you can make sure you are getting all of the benefits available, including the sales and use tax exclusion.

Other Benefits of Owning a Private Aircraft

If you’re on the fence about whether or not to purchase a private jet, the benefits extend beyond just tax write-offs. Owning a private aircraft can provide additional advantages that could boost your lifestyle and business. 

Owning a private jet gives you the ability to make customization that fit your needs, such as custom seating, flooring and carpeting, and cabinetry. Overall, custom private jets add a touch of luxury that make owning a private aircraft  worthwhile. 

Flying privately offers a level of comfort, privacy, and time saving that just isn’t possible when you fly commercially! Additionally, there are some great private jet membership programs that offer tremendous benefits like discounts for chartering planes. There are also some excellent jet and aircraft associations for owners that offer wonderful networking opportunities and exclusive events just for members. 

Conclusion: Southern Air Custom Interiors for Your Private Jet

It’s hard to deny that the tax benefits of owning a private jet are significant. Even if you don’t own a private jet (or any aircraft), there are still ways for planes to be lucrative investments in your business or personal life—and once again, the tax benefits play a key role in making that possible. The next time you’re looking to buy or sell an airplane, make sure to look into your available options and see how they could benefit your bottom line.Southern Air Custom Interiors can help ensure that your private jet is looking and functioning at its best. Our skilled technicians can help assist you in designing your custom private jet, take care of any necessary refurbishments that you may need, and annual maintenance, all of which help with the overall resale value of your aircraft.