Tax Experts Outline Who Truly Benefits from Aircraft Depreciation Incentives and Key Pitfalls

Aviation tax professionals have outlined who genuinely benefits from aircraft depreciation incentives and where buyers commonly misjudge them. Zeinat Zughayer, Senior Manager of Tax Advocacy and Controversy at Baker Tilly, says buyers already using private aviation frequently and planning to hold an aircraft long-term are best positioned to benefit, including individuals or businesses currently relying on fractional ownership or charter services with sustained anticipated usage.

Noah Block, Aircraft Tax Advisor at Aviation Tax Consultants, identifies profitable business owners with customers, clients, or projects across multiple locations as the primary beneficiaries, stating that "W2 employees and retirees will see little practical advantage" and noting that ongoing fixed and variable operating costs, particularly for jet aircraft, are substantial. Thomas Garbaccio, CEO at JB Aircraft Finance, LLC., explains that financing an aircraft can be as tax-advantageous as paying cash outright, since "the tax basis for depreciation is the purchase price" — meaning a buyer who finances a $10 million aircraft may still potentially depreciate the full amount, subject to applicable Internal Revenue Code Section rules, with interest expense on the financing also potentially deductible.

Neo Penn, Director at South Africa-based Webber Wentzel, says the incentive is most valuable to taxpayers with sufficient taxable income to absorb the deductions, with buyers operating at a loss or with minimal South African tax exposure unlikely to see meaningful benefit. Colleague Kutlwano Phaahla, a candidate attorney at the same firm, adds that without taxable income to absorb the allowance, depreciation merely creates or deepens an assessed loss. Block notes a common misconception that bonus depreciation makes an aircraft effectively free, when in reality it reduces taxable income in the year the asset is acquired and placed in service, and that depreciation is recaptured as ordinary income when the aircraft is later sold. Penn clarifies that pre-owned aircraft can qualify for depreciation, provided they have not previously been used by that particular taxpayer in its trade. Zughayer stresses that flight logs alone are often insufficient, and that taxpayers may also need calendar entries, meeting invitations, email correspondence and conference registrations to substantiate the business purpose of travel, with inadequate documentation during an IRS examination able to result in deductions being disallowed entirely.

The advisors' comments describe how tax-driven aircraft acquisition decisions concentrate benefit among a narrow buyer profile: high-income, multi-location business owners with sustained flight usage, while retirees and salaried employees gain little. This mirrors how accelerated depreciation functions generally as a timing benefit tied to taxable income capacity, not a subsidy available equally to every purchaser.

The recapture mechanism Block describes shows that depreciation shifts tax liability into a later year at ordinary-income rates instead of eliminating it, so the stated strategy of buying a replacement aircraft in the same tax year an existing one is sold becomes a way of deferring that liability rather than avoiding it. Documentation requirements identified by Zughayer, including calendar entries, invitations and correspondence beyond flight logs, function as the practical gate on whether a deduction survives an IRS examination at all.

What remains to be seen for individual buyers is whether their income level, usage pattern and hold period actually match the profile these advisors describe as favorable, since Garbaccio's warning about underweighted operating costs, residual value and future disposition suggests the tax calculation is only one part of a purchase decision that also depends on long-term ownership economics.