Why Are French Tax Shelter Yachts The Best Deals Out There?

Some of the best deals are yachts that were in the French tax-shelter program. Here is a description I gave to a client of mine:

The French government developed the "Loi Pons" tax shelter program to help stimulate the tourist economies of the French Overseas Territories such as St Martin, Martinique, Guadeloupe and Tahiti. So, the Certified Accountants in France will sell shares in yachts to their clients who need tax deductions. In some cases if they invest 50,000 Euros for a share in a yacht they will get a tax credit of 50,000 PLUS they get some depreciation allowances...so many French taxpayers like to do these. That is one reason why the French build more yachts than any other country. To qualify for the deductions the yacht must stay in charter service for 60 months ... that is why this particular boat we are talking about must stay in charter until March 2015 which is 5 months away. These investors almost never use the boat or even see it. 

The charter companies like to "pre-sell" them in advance so they can then plan to order another boat to replace the boat that is "phasing out". So they will discount the boat if you will make a deal in advance. I have done hundreds of these deals and I feel they are some of the best "deals" out there.

Here is how the deal works;

- once you find the boat you want we make a written offer with a 10% deposit, get the offer accepted and do a survey and sea trial. If we find any problems at survey you can cancel the deal for just about any reason. After survey you usually have a week to "accept" or "reject" the boat. Sometimes after survey we give a "Conditional Acceptance" which means you will take the boat IF they do certain things like replace the sails, fix an unforeseen problem, or whatever. Sometimes the charter company demands more deposit down (like 30% total) once you "accept" the vessel.

- then, let's say the phase-out date is March 31, 2015 which is 5 months away. We schedule the surveyor to go back and re-inspect the boat upon phase-out to make sure there is no new damage. If new damage is found that costs less than 5% of the value of the boat to fix then the charter company must fix it and the Buyer must proceed with closing. If the damage is over 5% of the value of the sales deal then the Buyer has the option to cancel the sale and get a refund of deposit OR we negotiate with the Seller to repair it. 

- then when the boat passes the "second survey" the final amount is due and the charter company proceeds to deflag the vessel and transfer title. The French government then issues a deflag certificate which guarantees a clean title. It is the best title in the world because of this solid guarantee. This can take 3-6 weeks to get. 

The Best Yacht Charter Management Programs

I was asked what the best yacht charter management programs are for income safety and helping to pay for the yacht...Here is the answer:

There are a number of different programs out there and I have done them all so I know the good and bad of each...By far the best is the "Guaranteed Income Program" OR a "55% Down Program" because you know exactly what you are getting with no "surprises" and if there is an economic downturn or terrorist attack that kills air travel for a while then you don't suffer. In both programs the charter company covers all expenses (dockage, insurance, all maintenance, etc) and you get between 6-12 weeks/year owner use. You can often also get "reciprocal owner use" which means you can use your owner time on other boats (like if yours is not available) and in other locations all around the world. 

GUARANTEED INCOME: The charter companies will only do the guaranteed income program with certain models that are in high-demand. The Lagoon 52 is usually one of those. They will pay you 8-9%/year guaranteed (payable monthly so you can use the payment to cover a loan payment) for between 60 and 66 months. The 8% is based upon whatever you spend on the yacht including cost to deliver it to the base. so, for example, let's say you spend $1,000,000 your guaranteed annual payments will total $80,000 for at least 5  or 5.5 years. The yacht will probably have to be kept in a high demand charter destination such as the BVI or St Martin.

55% DOWN PROGRAM:

In this program they cover all expenses and you put down 55% of the cost of a new boat. They use the charter income to service a loan they get from a French bank or leasing company. Then in "month 66" you pay $1 and they transfer title to you. 

This is just an overview and I can talk for hours about these programs so give me a call with questions...Different charter companies allow varying amounts of options but they prefer that you keep it the same as all their other boats in the fleet because some options require extra maintenance and since they pay for all that they want to limit high-maintenance options.