As the end of the year approaches, aircraft buyers often feel the pressure to close deals before December 31 to take advantage of tax benefits, most notably, bonus depreciation. Whether you are a seasoned buyer or stepping into aircraft ownership for the first time, there are critical financial, legal, and operational issues you need to navigate quickly and carefully.
Here are seven key considerations if you are planning to purchase an aircraft before year-end:
1. Yes, Bonus Depreciation is Theoretically Available (if You Qualify)
With the passing of the One Big Beautiful Bill Act in 2025, the Trump Administration reinstated the bonus depreciation on business aircraft purchases that had recently phased-out. The new legislation brought back 100% bonus depreciation and made it permanent for qualified property.
Under these new rules, aircraft owners can now deduct the entire cost of an aircraft in the year it is placed in service, rather than depreciating it over multiple years. This immediate expensing benefit applies to both new and used aircraft that meet the specific qualification requirements and provides major flexibility in terms of tax planning. For a business purchasing a $10 million aircraft, the ability to immediately expense the entire cost yields substantial tax savings and significantly improved cash flow.
Why do we say ‘theoretically?” Because IRS rules are strict, timing is everything, and you cannot assume eligibility. Also, even if it is available, accelerated depreciation may not be the ideal approach for you based on your tax situation. Before you buy, you should consider a solid review of your specific tax situation with your accountant and aviation attorney.
2. Timing is Everything! The Aircraft Must be “In Service” Before Year-End
To claim bonus depreciation in 2025, the aircraft must be placed in service by December 31.That does not just mean signing a contract or even taking delivery. The aircraft must be ready for its intended use, all material modifications and upgrades must be complete, and the aircraft must actually be in operation as a part of your business operations in 2025. Personal use does not qualify. Missing the December 31 deadline, even by a day, can mean losing out on millions of dollars in potential deductions in the current year.
3. You Will Need to Show at Least 50% Qualified Business Use, and Preferably More
To claim bonus depreciation (or even the slower MACRS depreciation) in 2025, the IRS requires at least 50% qualified business use, and many tax advisors strongly recommend maintaining closer to 100% in the first year to avoid scrutiny. And you need to document it in your own records in case you need to defend against an audit down the road. Casual or mixed use (e.g., personal trips or vacation travel) can muddy the waters and trigger audits. A well-documented usage plan is essential, so make sure your team helps you track and substantiate your use properly.
4. Time Is Short, But Don’t Skip the Pre-Purchase Inspection
Rushing to close a deal before year-end should not mean skipping due diligence. A pre-purchase inspection (PPI) is critical to avoid inheriting costly maintenance issues or hidden defects. Make sure your Letter of Intent (LOI) and Purchase Agreement include the right to conduct a PPI and to walk away if material issues are found. Neglecting this step could turn your tax-saving asset into an expensive liability.
5. Buying a Foreign-Manufactured Aircraft? Watch Out for Tariffs!
If you are considering an aircraft manufactured abroad (even by U.S. companies with overseas facilities), be aware of the lingering tariffs from the Trump Administration. At this point in 2025, these could be as much 39% in import taxes in some cases. The good news: tariffs are depreciable and deductible if your aircraft is being used for business use. The bad news: tariffs are a major cash-flow factor and must be considered upfront. Work closely with your customs broker, aviation attorney, and tax team to understand the impact and maybe how to structure around this.
6. How You Own the Aircraft Matters – A Lot
Ownership structure is not just a tax question. Aircraft ownership involves a number of considerations, including FAA compliance, liability exposure, and state sales and use taxes, among other things. Whether you are buying the aircraft through a business entity, trust, or leaseback arrangement, structuring ownership correctly from the start is critical. Improper setup can invalidate tax deductions or cause you to (accidentally) be operating an illegal charter service. So, seek advice early from professionals who understand both aviation and tax law.
7. Are You a First-Time Aircraft Buyer? Build Your Team Early
If this is your first aircraft purchase, don’t go it alone. This is a good rule of thumb for even the most experienced aircraft owners/buyers. Assemble your team early and lean on their expertise to avoid expensive mistakes. Your team should include:
- An aviation-savvy accountant
- A specialized aviation attorney
- Your CFO or key finance decision-makers
- A management company or flight department
- Possibly a lender, customs broker, and insurance expert
Trying to navigate the purchase solo or with general advisors that are unfamiliar with aviation can lead to costly missteps and compliance issues.
Final Thoughts
Need help making sure your aircraft purchase checks all the boxes? Start those conversations now. The December 31 deadline waits for no one.
Whether you are considering your first aircraft purchase, expanding an existing fleet, or reevaluating current ownership structures, FMJ can help you navigate this unique landscape to maximize the substantial benefits available, including bonus depreciation. The enhanced tax provisions alone make this an opportune time to consider aircraft ownership. Aircraft ownership strategies, with planning and expert guidance to navigate the rules properly, can deliver exceptional value to qualified owners. If you have questions about this or any other aviation topics, FMJ’s Aviation Law Team can be reached at aviation@fmjlaw.com.
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