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For some aircraft owners, there are benefits to registering their aircraft through a company, including depreciation, interest expense, preservation of capital, and the time savings associated with private aircraft operations.

A popular strategy for business owners purchasing aircraft is to use an accelerated depreciation schedule. This strategy often involves securing a shorter-term loan with a longer amortization period, for instance, a five- or seven-year term, ending with a balloon payment, and a 10- to 15-year amortization. Using the accelerated depreciation schedule, all the available depreciation on the aircraft can be taken within the first five to seven years of ownership.

In this strategy the monthly payment calculated over the 10- to 15-year amortization will remain relatively low. When you get to that five- or seven-year decision point in the loan term, the benefit of depreciation on the aircraft has been realized. Most business owners then sell that aircraft and buy another one to continue the depreciation advantage cycle with the next aircraft.

Also, financing uses only a small portion of your capital up front on the downpayment, while the remaining funds that could have been used to pay for the aircraft are left in the business and available for reinvestment. You may be able to deduct the interest as an expense.There may be benefits to registering your aircraft through a company, such as depreciation, interest expense, and preservation of capital.

There are some disadvantages to owning an airplane through a company, depending on the type of company you own and operate. If it’s an operating company, some lenders may be uncomfortable financing an aircraft that is going to be used as a business tool. AOPA Finance can find a good lending option for your company’s situation.

You could be in a situation where none of these benefits apply. For instance, maybe there isn’t an advantage to taking depreciation up front because your company structure doesn’t allow for the purchase of an aircraft. In that case, registering an aircraft individually might be a better option. Also, if you buy an aircraft through your business, the business owns that aircraft. Should anything happen to the business—from a lawsuit to insolvency—your aircraft will be affected as well. A plaintiff going after your assets could force you to sell the aircraft in bankruptcy court.

A desire to use the aircraft for a mix of business and pleasure may complicate the ownership structure. That complication may dissuade you from owning the aircraft through your company. We defer to your CPA and other legal professionals to determine what is best for your specific situation.

Finally, regardless of whether the aircraft is registered with you as an individual or through your company, most lenders will require a personal guarantor on the loan. The owner or operator of the business is typically the one sought after for a personal guarantee, which may even hold true for a C corporation or a publicly traded company.

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