New Jet? Understand the Tax Benefits of Bonus Depreciation

The news is teeming with financial jargon and op-eds spouting the benefits and shortcomings of the American Taxpayer Relief Act of 2012, which was signed into law at the beginning of January. Bonus Deprecation? Section 179? Through this financial news flurry, it can be difficult to find grounded information about how this legislation affects all aspects of business, and private jet owners in particular.

Here’s how it works: A company can write off the purchase price of certain equipment a little at a time through depreciation. However, to boost the bottom line of U.S. businesses, the government instated Section 179 of the tax code. Section 179 allows businesses to write off 50% of the purchase price of qualifying equipment, such as a new private jet, in the first year rather than claiming the deduction over a period of five years (this stimulus applies to all qualified capital assets, not just aircraft).

The idea is to give businesses an incentive to invest in themselves through the purchase of new equipment. As of 2007, Section 179 was supposed to be phased out and eventually eliminated. However, this tax code has proven popular over the years and has been included in multiple Stimulus Acts since 2007.

The American Taxpayer Relief Act of 2012 is no different. This bill extends the 50% accelerated depreciation tax relief, also known as Bonus Depreciation, to factory-new jets purchased in 2013. This extension includes any aircraft ordered by year-end. As long as you have a written, binding contract by Dec. 31, a new jet is covered by Bonus Depreciation even if it won’t be delivered until 2014. This legislation applies only purchases of new jets, not pre-owned aircraft.

So what does all this mean? It means that now is a good time to buy a jet!

This legislation represents an opportunity to determine the best private jet purchase for you and your business. Compare the benefits of accelerated depreciation on a new aircraft with the up-front savings of purchasing a pre-owned jet. See this month’s Art of the Deal article to learn about how a qualified and experienced broker can help you determine the right choice for your individual goals.

For more information about Bonus Depreciation and Section 179 of the tax code, see and

Did you like this? Share it!