Tax Reform and Aircraft Ownership

December 29, 2017
December 29, 2017

Last week the United States House and Senate came to an agreement on historic tax reform legislation. Mente Group would like to let you know about the changes specifically related to aircraft owners and operators.

There are two changes to the current tax law that affect business aircraft ownership and use. The first is a provision that allows for the immediate expensing of 100 percent of new and used equipment, including business aircraft. The provision is for all aircraft purchased in an arm’s-length transaction and placed into service from Sept. 28, 2017 through Dec. 31, 2022. The second provision allows business aircraft owners that hire a management company to provide support services to pay the non-commercial aviation fuel tax, as specified in the current law, and not the 7.5 percent airline ticket tax, bringing clarification to a long-standing tax policy.

Mente Group believes this will impact the business aircraft market and your operations in three ways:

  1. As you consider the value of your aircraft or fleet from a net present value or after cash tax planning standpoint, you need to consider that the values will be changing going forward.
  2. We anticipate the tax plan to create a significant amount of demand in a market that is already tightening from an acceptable aircraft standpoint.
  3. If you are considering the purchase of an aircraft, this is a good time to begin your planning, as we feel the market will improve. When you combine recent market price compression, preowned and new availability and the restructured tax provisions, there has never been a better time to buy than right now.

We hope that 2017 was a successful year for you and your company and that 2018 will bring you good health, happiness and prosperity. As always, Mente Group is happy to assist you with your aircraft related questions and activities. Please don’t hesitate to reach out to us if you would like to discuss how the new tax bill may affect you and your flight operation.