Is This Business Tax Hack Too Good to Be True?

So, can you really buy an airplane and pay zero taxes? Sounds great, right? But let’s talk about the reality behind this so-called tax hack.

Yes, business equipment—including planes—can be deducted, reducing taxable profits. But this strategy isn’t as simple as it sounds. You still need to pay for the plane, cover maintenance, fuel, insurance, and storage, and meet IRS rules for business use. It’s a real deduction, but one that applies to a very small percentage of people—not exactly an everyday tax trick.

In this reaction, Matt breaks down what’s true, what’s misleading, and why this isn’t a loophole that just anyone can use. Would this work for you? Let’s discuss this in the comments!

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript: 

Business Advice Video:

But an airplane is deductible 100%. At least it’s been for a number of years and they haven’t changed it yet. But if you go buy an airplane, for the business, and there’s rules you’ve got to follow to do it, but you buy the airplane and so this is the simplified version. Your profits here are $350,000, but if you buy a $350,000 airplane, you can write the whole thing off the first year. So instead of paying tax on $350,000, what are you paying tax on? Nothing. Nothing it just saved a ton of money. 

Matt’s Review:

All right, cool. Well, I guess we should all just go out and buy an airplane. It seems pretty simple. Yes. What he’s saying is factually correct. You can depreciate equipment that you buy for your business, and that includes vehicles like work trucks. It includes heavy equipment like forklifts or cranes or things like that, and it also includes airplanes. So if you bought an airplane and you write the whole thing off the first year, it reduces your profit by that much. Profit is what you pay tax on, so you could potentially reduce your profit to zero the year you bought the airplane. A couple of catches. One, you have to pay for that airplane, right? So if you’re buying, in his example, a $350,000 airplane, you have to pay $350,000 to buy it. Or you don’t have that cash or don’t want to use that cash, you can get a loan and pay 10% down, 35,000. Finance the rest, but now you’re paying interest. Either way, you’re on the hook for paying $350,000.  Second thing is, buying an airplane in itself is just the start, right? Then, once you’ve bought an airplane, you have ongoing costs for maintenance, for fuel, for oil, for all the replacement parts, tires brakes, everything else. Except airplanes are even more expensive than cars to maintain because they have to have regular inspections to make sure they remain airworthy and insurance on a plane is not cheap and you need a place to keep it, a hanger or a tie down. So yes, if you were gonna buy a plane anyway or you’re planning to buy a plane and you’re a pilot and there’s a business case to be made for the business owning a plane,  it can be a nice tax write-off, but it is by no means free and it is by no means a sure-fire thing that everyone can do.  You can just go out and buy an airplane for your business to save on taxes. He’s not wrong, but the people who can apply this advice is a very, very limited crowd. If you’re one of them, great. It’s an awesome deduction that you can take advantage of. For everybody else, it’s like, yeah, that’s a nice idea, but never gonna happen for me. So kind of a strange thing to, I guess, again, put out there for everybody when it’s a very small slice of the world that is gonna be able to use this advice.