With 2024 coming to a close, easing interest rates, and election uncertainty settled, a unique set of circumstances has come to affect the yacht sales and charter market. If you are interested in buying a yacht, read on to find out why it is a good time to do so. In this interview, Captain James Fachtmann, president and CEO of JFA Yacht and Ship discusses the state of the market with Jim Query, Owner of Virgin Island Yacht Charter in
St. Thomas.
The state of the market post-election
Going into the election, people sit on the sidelines and avoid making decisions due to uncertainty in the market. Now that this uncertainty is gone, people are taking action.
Implications for those looking to buy or charter in the remainder of this year
Particularly on the purchase side, there is a strong incentive to close before the end of the year. There has been a softening in the prices of new boats. In the past, as boat prices rose, charter revenue was unable to keep up. Now, the charter market is keeping pace with the
boat price market, which is very helpful for owners who charter their boats. There is a larger inventory of boats because of slowing boat sales following a boom during the COVID-19 pandemic. There is now more inventory available for purchase, and that can
be closed on sooner.
Interest rates and costs
In the last couple of years, interest rates have reached as high as 8 to 9%. Now at around 6%, combined with lower boat prices, circumstances are very attractive for buyers. The decreasing interest rates also encourage charter. Historically, the goal for owners who charter their boats has been to cover the costs of ownership and even generate some return. We are now getting back into that territory rather than just having it offset a portion of the cost of ownership.
Tax advantages of buying in 2024
The elected party plans to make the cost of buying a boat 100% depreciable in the first year, and to make this retroactive to 2024. When you can write off the full price of the boat in the first tax year, you are in effect using government money for the entire downpayment on the boat or more. This is exceptionally motivating for buyers. If you want to take advantage of this during this tax year, the immediacy is very high. You
should make a decision in the next 15-20 days, maximum 30 days, in order to allow sufficient time for the closing process.
Prospective buyers who want to offset the purchase price should take action quickly. The closing process can take 2-3 weeks, and the last two weeks of December are slower due to the holidays. Everything including paperwork and final agreements should be ready by early December, or mid-December at the latest.
In summary, the three things that have changed are:
1. The uncertainty in the market has been resolved post-election
2. Interest rates have dropped and are dropping further
3. This is the time to take action to benefit from year-end tax advantages
The Action Plan for those looking to buy
Contact your broker immediately and connect them with your tax and financial advisors for tax planning and loans. Get the deal finalised before the 10th of December. This will be the busiest month of the year, and there is high demand for both brokers and
tax and financial advisors.
Take action now to get access to all the resources you need and close before the end of the year.
Contact your broker at JFA, James, or Jim.
Call James at 945-732-5825 or email at james@jfayacht.com
Call Jim at 972-741-1067 or email at jim@viycstt.com
