Fees on boat owners and travelers continue to rise, impacting not only everyday U.S. citizens but also high-net-worth individuals looking to purchase and maintain big ticket items such as yachts. These hikes are hindering luxury yacht sales and some high income earners appear poised to wait until after the upcoming U.S. presidential election to purchase a luxury sailing vessel. Concentric’s team of Global Intelligence analysts are watching these developments in the boating industry to help you mitigate the potential impacts for your family and business needs, as well as monitoring any fallout related to this fall’s presidential election.
Increasing Maritime Taxes…
Taxes on boat owners, from registration to fuel charges, are on the rise in many U.S. states as local governments determine how to balance ongoing recreational costs. Taxes are also climbing for those considering upcoming yacht travel as numerous countries have announced increases on yacht charters cruising their waters this year.
- The State of California proposed a 300 percent increase in boat registration fees in May 2023 to shore up infrastructure such as launch ramps, boater education, aquatic centers, and boating law enforcement.
- The Turkish government announced on July 7, 2023 an increase in Value Added Tax (VAT) rates from 18 to 20 percent for yacht charters. Yacht charter operators in the Bahamas are experiencing a 40 percent decline year-over-year due to the 10 percent VAT on foreign-owned yacht charters, according to open source reporting.
… And a Cooling Sales Market
Overall boat sales are returning to pre-pandemic levels due to higher interest rates, price increases on boats, and economic uncertainty. Yacht sales, particularly for superyachts, are also down with the demand for these mega vessels declining by 17 percent, according to SuperYacht Times’ State of Yachting 2024 report. According to the report, this decline is due to backlogged waiting lists, rising prices, and oligarch sanctions in Russia.
- Sales for superyachts fell in 2023, with 203 superyachts purchased, a decline from 245 sold in 2022 and 313 sold in 2021. Many wealthy Russian buyers left the market because of the country’s invasion of Ukraine in 2022. Buyers who want to purchase a superyacht will also have to wait up to four years for their vessel.
Some high net worth buyers are watching to see if former President Donald Trump is reelected this fall before buying a yacht, in the hopes his reelection will result in new tax cuts. According to a source quoted in the New York Post who is looking to purchase a yacht and jet, “I’m waiting until after November. If I can save millions on my taxes by waiting a few more months, I will.” Trump told a group of billionaires at a recent Palm Beach fundraiser that “restoring the 2017 Tax Cuts and Jobs Act (TCJA) is a priority.”
- As part of the TCJA, one of the tax cuts included 100 percent depreciation, or deducting the entire cost of a yacht or jet used for business expenses from taxes. The TCJA also allows yachts to be classified as second homes, which might allow yacht owners to deduct their loan under the code’s mortgage interest deduction portion.
Concentric Can Help
Concentric’s security professionals are ready to help you protect your luxury purchases, including yachts, and help you plan for your future, particularly as we enter what could be a tumultuous election season. Concentric can work with you to provide:
- Travel Risk Assessments for any upcoming maritime travel;
- Active Monitoring services to track activities within and near any specific travel locations;
- Analysis and Trends reports to highlight any changes in the maritime industry and ongoing trends, as well as key developments surrounding the 2024 U.S. presidential election;
- Red Teaming Analysis to ensure the information surrounding your luxury purchases is safe and concealed online;
- Executive Protection agents that accompany you during travel and can protect your luxury assets, whether at home or abroad;
- And Cyber Services, including Eclipse by Concentric, to help keep you, your family, and your assets safe.
