NARA credits aircraft market rebound with new US tax law’s 100% bonus depreciation
April 2, 2018 – The recently enacted bonus depreciation tax treatment in the United States for new and used aircraft will help the business aviation industry turn the corner in 2018, according to the experts at the National Aircraft Resale Association (NARA).
“Business aircraft sales have been down so long it will take us a while to relearn how to navigate an up market,” said NARA Chairman Brian Proctor. “But this should be a better ride than we have had in a long time.”
NARA credits the potential turnaround to the 2017 Tax Cuts and Jobs Act, which provides for 100 percent bonus depreciation, allowing taxpayers immediate deduction of the cost of a new or used business aircraft acquired and placed in service by Jan. 1, 2027. Tax reform is driving aircraft values used for business, with lower corporate and effective rate pass-through rates combined with 100 percent depreciation.
“While political and economic developments around the world can influence the market, now is a great time to buy an aircraft before prices increase,” Proctor said. He notes that used aircraft in excellent condition are selling at a faster pace than in years past. NARA’s website lists hundreds of aircraft for sale, represented by NARA-certified brokers/dealers. Business aircraft in good condition are expected to demand higher prices as early as the third quarter of the year as the market heats up. Additionally, new aircraft bookings are expected to experience resurgence under the new tax law, creating added demand for used aircraft.
“Our NARA-certified brokers have recognized a change in the marketplace just in the first few months of 2018 since the U.S. tax reform was enacted,” Proctor said. “The market is generating more activity and demand and that is likely to increase as the economy continues to heat up, interest rates rise, and most indicators point to a general economic upturn.”
Proctor cautions that new and used aircraft sales under the new tax law still require buyers to seek the best tax and legal advice before making a purchase. NARA tax and legal experts and NARA-certified brokers and dealers familiar with transactions under the 2017 Tax Cuts and Jobs Act are standing by to assist buyers and sellers of used aircraft obtain the best deals possible.
“Clearly, our member brokers/dealers and service providers pride themselves on their ethical approach to business aircraft transactions, and this approach is even more important in a changing tax and economic environment,” Proctor said. NARA Chairman Brian Proctor is President and CEO of Mente Group, LLC.
All NARA members follow a strict NARA Code of Ethics, and the broker/dealer members must pass a rigorous certification process to assure the highest standards when buying and selling previously owned aircraft. Ultimately, they are recognized as NARA Certified Aircraft Brokers and Dealers. NARA Products and Services Members represent a variety of aviation services that also operate with the highest professional standards in the industry.
NARA, a professional trade association formed more than 25 years ago, is comprised of selected aircraft sales and brokerage businesses that are NARA Certified and aircraft product/services companies that adhere to the highest professional standards. Promoting the growth and public understanding of the aircraft resale industry, NARA members abide by an elite 14-point Code of Ethics that provides standards of business conduct regarding aircraft transactions.
NARA is working to raise awareness of the unfortunate ramifications of transactions involving brokers, dealers and aviation advisors who do not subscribe to high ethical standards.