2011 Tax Benefits – 100% Bonus Depreciation Benefits Aircraft Buyers!

by AirFleet Capital, IFA Aircraft Finance Program Provider

At the end of December, Congress passed a stimulus bill that significantly benefits aircraft buyers who purchase in 2011. Business buyers with a tax appetite, have a new environment that provides tremendous incentives for an aircraft purchase. Most likely tax incentives like this will not come around our way again for a long time – it’s an excellent time to purchase!

Despite the fact that we are a financing company, many of our customers are motivated by tax laws. While we're not the experts, here is a summarization of the benefits of this new stimulus package below:

Bonus Depreciation: The major benefit of the package is the increased Depreciation allowance, letting a business buyer write-off 100% of a new aircraft purchase and placed in service during 2011! The typical depreciation schedule under MACRS allows for only 20% in year 1. Bonus depreciation applies to factory new aircraft only and will decrease back to 50% in 2012 (still an acceleration from the normal allowable schedule) and the typical schedule in 2013.

Section 179 Increase: The limit for one-time expensing of assets purchased through a business remains increased at $500,000 for 2011. Additionally, the maximum allowable amount spent on capital purchases in order to receive the full $500,000 expensing benefit has increased to $2.5 million. This will enable most high-performance single-engine aircraft purchased for business use to receive the bulk of the Section 179 deduction. Section 179 expensing applies to both new and used aircraft.

What this Means for Aircraft Buyers: If customers purchase business equipment this year, it will dramatically lower their tax burden (and in some cases can result in a refund), more than any usual stimulus year, and much more than a typical tax year. According to Advocate Consulting, the leading aviation tax experts, “The 2010 Tax Relief Act provides the largest business tax incentive in recent history. A full 100% write off for new equipment purchased in 2011 is unprecedented and is expected to motivate equipment purchases throughout the year. The Act also extended the Section 179 deduction at $500,000 for used or new equipment. As general business conditions improve, these tax incentives will provide a sound rationale for adding or upgrading equipment such as business aircraft.”

To access IFA’s Aircraft Finance Program, simply call toll-free 800-920-5190 or click here. IFA's Aircraft Finance Program is fast, easy and simple and offers nationwide financing and refinancing for new and used aircraft, from single engine pistons to twins and light jets, including Light Sport Aircraft, from $50,000 up to over $5 million in value. Learn more.