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Comment by vidarh | Hacker News Reader

I'm assuming what the article says about operating costs is part of it. If you search around, you can find fully operational small cruise ships for a few million. The hulls and engines etc. last enough that the cost of these ships, whether outfitted for use as luxury yachts or cruise ships is dominated massively by operating cost.

So you can dream of being able to drop X million to own a dream of being on a yacht all the time. Then you realize you're not on it all the time, because you have a life, and whether you're on it or not you're dropping close to X million a year to keep the crew on hand and keep the yacht ready, and if you want to offset that, you're now running a yacht charter business.

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That's why there is a saying: "Don't own anything that flies, floats, or fuks."

That's for the poor. Billionaires don't care about the "rest of the year" maintenance costs.

It's OK, you can swear here. Although I always found "fornicates" more humorous.

I just looked it up, it was a quote on the HBO show, Ballers. (Not sure if they originated it, though, but that's where I saw it.)

Anyone know the origin of this, BTW? I can't tell whether this economist obit. is saying that Felix Dennis invented it:

https://www.economist.com/obituary/2014/07/03/felix-dennis

It's an actual quote from a movie or something. I've heard it before.... so I think the context of the swear is in align with the quote.

Meh, if you have $100b, is your life really going to change if you lose half of it or more?

No.

This gave me a good chuckle!

Many yachts that are actually used by the less wealthy are set up as their own legal corporation and labeled as a charter business for tax and liability purposes.

Do they do that to lower cost of having a yacht or does charter business have some special tax exemption?

I believe it's usually just a tax play. If it's a personal possession, 100% of the maintenance costs are after-tax $$. If they actively rent it out (even for only a portion of the year), then only their personal use of the yacht (maintenance and costs during that time pro-rated etc) would be paid for in after-tax $$. The rest of the costs would be business costs for the charter business. I suspect the accountants would set it up so that the charter business actually invoiced them for their own personal use of the yacht to keep that separation clear.

I suppose it's possible to claim yacht expenses as business expenses for things like entertaining clients, etc, and in some cases that might be quite legitimate. But I don't think people get away with nearly as much tax avoidance shenanigans as most people think - The tax man isn't that stupid and trying to claim that sort of use for luxury products is just asking for an audit.

It might be different for super-yachts with really high yearly costs, but for the under 100 ft category of pleasure yachts that cost 10-30k per year upkeep I don't think the net benefit would be worth the complexity. At least for those _trying_ to play honestly. I'm pretty sure every lawyer/dentist/doctor etc that owns one asks their accountant the same type of question, but I don't believe most bother setting it up like that.

source: I own a pleasure craft/yacht big enough to charter regularly to offset the ownership costs, but don't do it on the advice of my accountant.

I believe if you own a "business" that constantly loses money year-after-year, the IRS can classify it as a hobby and not tax-deductible. Though maybe that's why the yacht ownership turn-over is high; they sell off their "unprofitable business" as to not incure the tax liability of a hobby.

Nope, someone fought that issue since there is no law that says a business must be profitable and won.

IIRC it was drag racers or something similar.

>I don't think people get away with nearly as much tax avoidance shenanigans as most people think - The tax man isn't that stupid and trying to claim that sort of use for luxury products is just asking for an audit.

It all depends on how tangled a web you weave.

For example, this case only came to light due to a leak via Paradise Papers: https://www.businessinsider.com/how-lewis-hamilton-avoided-p...

One does not need complicated tax shenanigans to avoid a noticeable bottom line difference in what one pays to the IRS for owning a pleasure craft. Nobody is measuring how much fuel is used for a charter versus how much was used for the owner's fishing vacation.

I have lived in Florida around boats all of my life. There are quite a few yachts 55' and longer that have a legal entity registered on Sunbiz (http://search.sunbiz.org/Inquiry/CorporationSearch/ByName) and a sign that says they are available for charter. This sign never comes out of storage.

Probably depends on what degree your country’s laws are caught up and how much tax you’d be avoiding.

IE: the IRS is probably into such schemes and taxes are generally lower.

Not so in a lot of EU countries.

I doubt yachts are given much thought by the German or Austrian tax authorities.

They do that for the same reason that a carpenter I used to know had a Corvette as his company car. Deductible tax expense.

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