DA40NG 2022 Leaseback advices

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allisonleungDA40
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DA40NG 2022 Leaseback advices

Post by allisonleungDA40 »

Hi all,

I'm currently considering leasing back my 2022 DA40NG with about 250 tach time.
I'm a first time owner, so I'm not very familiar with the potentials and the risks involved.
Does anyone have previous experience to share? Is it worth it?

Thank you!

Allison
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chili4way
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Re: DA40NG 2022 Leaseback advices

Post by chili4way »

Allison, a lot depends on your reasons for considering the leaseback, to whom you would lease it, and how they would use the plane - especially compared to how you currently use your airplane and plan to use it going forward.

In my opinion, when it comes to leasebacks, partnerships, "plane-shares," or other multi-pilot airplane access models, maintenance matters are the most significant underappreciated consideration. There are risks of unfortunate misunderstandings and surprises regarding costs (scheduled, unscheduled) and operations (who, where, experience). This is particularly true for Austro engines.

BTW, your airplane used to be my neighbor at KADS. It's a beauty!
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Ed McDonald
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Re: DA40NG 2022 Leaseback advices

Post by Ed McDonald »

There are a number of things to consider.

Who is leasing the aircraft and what is they overall flying experience as well as time on type? If you are familiar with your aircraft I would do a check flight with the potential leasee or have someone with the experience on type do one. This is to give you comfort that they are not going to hurt your precious aircraft.

If you don’t know the leasee well you might want to ask around about them and what kind of reputation they have.

Insurance. Make sure they have adequate hull insurance. If they are leasing under your policy and you have a high deductible have them provide a letter of credit for the deductible.

Depending upon how long they are leasing the aircraft, you might want a fresh annual inspection prior to the aircraft being returned to you.

What kind of flying is this leasee going to do with the aircraft? Training?

Do you have a formal, lease agreement that would protect you should things go badly?

Your 250 hour aircraft is a big investment and I am sure that you would be devastated if it was damaged or abused. I would be very careful with whom I lease it to. If you do, make sure you have your bases covered.
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allisonleungDA40
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Re: DA40NG 2022 Leaseback advices

Post by allisonleungDA40 »

Ed McDonald wrote: Wed Dec 21, 2022 3:14 am There are a number of things to consider.

Who is leasing the aircraft and what is they overall flying experience as well as time on type? If you are familiar with your aircraft I would do a check flight with the potential leasee or have someone with the experience on type do one. This is to give you comfort that they are not going to hurt your precious aircraft.

If you don’t know the leasee well you might want to ask around about them and what kind of reputation they have.

Insurance. Make sure they have adequate hull insurance. If they are leasing under your policy and you have a high deductible have them provide a letter of credit for the deductible.

Depending upon how long they are leasing the aircraft, you might want a fresh annual inspection prior to the aircraft being returned to you.

What kind of flying is this leasee going to do with the aircraft? Training?

Do you have a formal, lease agreement that would protect you should things go badly?

Your 250 hour aircraft is a big investment and I am sure that you would be devastated if it was damaged or abused. I would be very careful with whom I lease it to. If you do, make sure you have your bases covered.
Hi Ed,

Thank you very much for the suggestions! You are absolutely right! Must be careful!
I have spoken with an AOPA professional, will raise these questions for our next meeting!

Allison
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Re: DA40NG 2022 Leaseback advices

Post by Boatguy »

If you're planning to report this on your taxes, take depreciation, write off some expenses, etc., there are tax considerations with which you should become familiar. You should walk through the whole lifecycle with your tax advisor. Some people (mea culpa) don't consider what happens when the lease comes to an end and then when they eventually sell the plane.

And of course there are insurance and liability considerations you should discuss with your insurance agent (who will definitely raise your premiums) and with an attorney.
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allisonleungDA40
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Re: DA40NG 2022 Leaseback advices

Post by allisonleungDA40 »

Boatguy wrote: Thu Dec 22, 2022 9:30 pm If you're planning to report this on your taxes, take depreciation, write off some expenses, etc., there are tax considerations with which you should become familiar. You should walk through the whole lifecycle with your tax advisor. Some people (mea culpa) don't consider what happens when the lease comes to an end and then when they eventually sell the plane.

And of course there are insurance and liability considerations you should discuss with your insurance agent (who will definitely raise your premiums) and with an attorney.
Hi Russ,

:shock: Roger! Thank you for your advice!
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Re: DA40NG 2022 Leaseback advices

Post by Joey »

Insurance is a big factor. If you are thinking of a leaseback to a flight school, the commercial insurance is about 6x the cost of private and business insurance. When you compare rental rates of say a mid 70’s C172 to a 2000 and later DA40, you need to charge a lot more for the DA40.

Renters will not treat your diamond like they would if they owned it.

Maintenance costs are fairly low, except for consumables like tires. 100 hour inspections need to be factored in.

If you are doing this for a tax write off there are other ways to do this. If your tax accountant does not know how to do this Tax Advocates in Florida will set up a program for you.
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Charles K
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Re: DA40NG 2022 Leaseback advices

Post by Charles K »

Joey - are you saying other ways to generate tax write offs besides the lease back. Obviously using it for a business works. Any other ways you can share?

Thanks
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Joey
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Re: DA40NG 2022 Leaseback advices

Post by Joey »

If you have a related business use, you link the business together with a memorandum of understanding. You have to be careful how you log flights and document like crazy but it is doable. Advocate Tax was the group that set it up for me.
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Colin
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Re: DA40NG 2022 Leaseback advices

Post by Colin »

I worked with Advocate on our DA40. At the time I was working on a couple building projects in Las Vegas and living ten minutes from KSMO. My account, five years in, said, "It seems like they essentially got you nearly the whole plane for free." I documented like crazy, flew more than half the flights interstate (Safe Harbor rule, so no state sales tax on the purchase), and was really flying for work a lot of the time (I wasn't instrument rated yet so there were fewer family trips since we couldn't get stuck).

They were unable to do anything with the (used) DA42 I purchased especially since at that point I had no active building projects and it's a hard sell that my wife needs to be in any particular place to write.
Colin Summers, PP Multi-Engine IFR, ~3,000hrs
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