Buying a Private Jet: Financing, Tax Strategies, and When It Actually Makes Sense

Flying private is often portrayed as the ultimate luxury, but for many entrepreneurs and real estate investors, it can also be a business tool designed to buy back time.

In this episode of the TaxSmart REI Podcast, Thomas Castelli and Nathan Sosa are joined by Preston Holland, founder of Prestige Aircraft Finance, to break down how private aviation works, when ownership actually makes sense, and how the tax side really works. They also cover common misconceptions around bonus depreciation and why many of the viral “write off your jet” strategies on social media oversimplify the reality.

Preston Holland’s Background in Private Aviation

Preston Holland is the President and Founder of Prestige Aircraft Finance, where he helps high-net-worth individuals and business owners structure aircraft financing. His interest in aviation started early, influenced by his father’s experience flying aircraft. He later transitioned from operating a service business into aviation finance and ultimately launched his own firm. In a recent year, his company closed over $150 million in aircraft transactions, working with dozens of lenders across the aviation industry.

The Four Ways to Fly Private

Before purchasing a jet, it’s important to understand the primary ways investors access private aviation.

1. Charter Flights

Chartering is on-demand private aviation, similar to booking a ride when needed. It offers maximum flexibility with no long-term commitment but typically comes at the highest hourly cost. Charter flights are subject to a 7.5% Federal Excise Tax for domestic flights in the U.S.

2. Jet Cards or Membership Programs

Jet cards provide prepaid access to a fleet of aircraft through providers like Wheels Up, XO, and Magellan Jet. These programs offer predictable pricing, simplified booking, and consistent access, but they are still treated as charter flights and subject to federal excise tax.

3. Fractional Ownership

Fractional ownership allows investors to purchase a share of an aircraft, such as a 1/8 share that typically provides 75–100 flight hours per year. Providers include NetJets, Flexjet, and Airshare. Rather than owning a specific aircraft, you gain access to a fleet within that category.

4. Whole Aircraft Ownership

Whole ownership involves purchasing an entire aircraft, offering maximum control and flexibility. However, it also includes significant responsibilities and costs such as pilot staffing, hangar fees, insurance, maintenance, and operational management. This is the most capital-intensive option.

When Does Owning a Private Jet Make Financial Sense?

According to Preston, ownership typically begins to make sense at approximately $10 million in annual income and $100 million in net worth, including business value and investments. Usage is the most important factor. Most experts suggest at least 150–200 flight hours per year. Below that level, chartering, jet cards, or fractional ownership are generally more economical.

The Business Case for Flying Private

While often viewed as a luxury, private aviation can function as a productivity tool. It allows business owners to visit multiple locations in a single day, access secondary markets not served by commercial airlines, reduce downtime, and maintain flexible schedules. For real estate investors managing geographically diverse portfolios, this can significantly increase efficiency.

The Tax Strategy Behind Aircraft Purchases

Private jet purchases have gained attention due to bonus depreciation. Under current tax law, certain aircraft may qualify for accelerated depreciation, allowing a significant portion of the purchase price to be deducted upfront. However, there are important limitations.

Business Use Requirements

To qualify, the aircraft must be used more than 50% for business purposes. If usage drops below that threshold, depreciation deductions may be reduced or recaptured. Proper tracking and documentation are critical.

IRS Scrutiny on Aircraft Deductions

The IRS has increased scrutiny on aircraft-related deductions. Aircraft purchases require detailed reporting on Form 4562, and audits may involve extensive documentation such as flight logs, business purpose records, passenger lists, and trip details. In some cases, auditors may request hundreds of pages of supporting documentation.

Why Specialized Aviation Tax Advisors Matter

Aircraft taxation involves unique rules that differ from standard business assets. Preston recommends working with advisors who specialize in aviation tax, including expertise in aviation sales tax, federal excise tax, state-specific regulations, aircraft structuring, and depreciation compliance. Improper structuring can eliminate expected tax benefits.

Why Chartering Often Makes More Sense

For many investors, chartering remains the most practical option. If you fly fewer than approximately 75 hours per year, chartering is usually more cost-effective. Aircraft ownership comes with substantial fixed costs, including pilot salaries, hangar fees, insurance, and management expenses, which apply regardless of usage.

The Hidden Costs of Leasing or Chartering Your Aircraft

Some owners attempt to offset costs by leasing their aircraft to charter operators, but this rarely produces strong returns. Post-COVID aircraft pricing has increased significantly, making profitable charter arbitrage difficult. In most cases, owners are only able to offset a portion of operating costs rather than generate meaningful income.

Fractional Ownership: A Middle Ground

Fractional ownership provides a balanced option for investors who want access to private aviation without managing operations. It works well for those who fly moderately frequently and want predictable access while avoiding the complexity of full ownership.

Recommended Entry-Level Aircraft

For those entering private aviation, Preston suggests starting with aircraft that balance efficiency, reliability, and cost.

Jets include the Citation CJ series and Citation XL/XLS, while turboprop options include the Pilatus PC-12 and King Air.

Final Thoughts: Private Aviation as a Time Investment

Private aviation is not just about luxury—it’s about time. For high-performing entrepreneurs, the ability to move faster, accomplish more, and control their schedule can be far more valuable than the financial cost. As Preston explains, the true return on flying private often comes from increased productivity and flexibility rather than direct financial gain.

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Disclaimer: This podcast summary was generated from the transcript and may contain some errors or miss key points from the audio recording.