What's a trade in worth today?

[travelite]

That one is a little shorter and a couple less options, but that sucks regardless. It really makes it a stretch, so I wonder what the people that are spending $1.8M think?

Hi Karl,

This is how it's done:

http://marathoncoachsales.com/news/B...on_9_30_10.php

In other words, by the end of the third year the coach is 100% depreciated. If your business is in a 35% tax bracket and you bought a 1.8M coach, you get 630K back compliments the IRS. Then, at the end of three years, you put the coach on the market for 1.17M and you're three year ownership cost was zilch. Repeat as necessary.

This is why you see a lot of 3 year old coaches on the market.

Admittedly my explanation is somewhat of a simplification, but you get the gist.

[Jon Wehrenberg]

The key is you better have a damn good justification for the purchase, and your record keeping has to be impeccible.

But David is absolutely correct, except for one little detail. When you realize the $1.17 MM (as a trade in or outright sale) you have to recapture the gain and you are subject to pay taxes on that gain. Ouch! Of course if you want to avoid the tax consequences just hang onto the coach partially purchased courtesy of the IRS. In 10 or 15 years when you sell it the gain which you recapture will be quite modest thanks to how the market values older coaches.

Having said that, we have often been approached in campgrounds by owners of high end motorhomes who want to talk about the Prevost. Up until the XLII was produced very few knew the difference between a relatively new Prevost and an older one. Even today there are a lot of folks who really don't know the ages of our coaches. I have been shocked at the number of people driving one or two year old high end motorhomes that have mentioned how they wished they could afford a Prevost and who stated that one day they will own one. It is like they have been hit in the head with a club when they are given the tour of the coach and then find out I paid a lot less for my coach than they did for their Signature or similar motorhome.

"What is a trade worth today" is actually the wrong question motorhome purchasers should ask. They should instead determine if within their budget for a conventional motorhome is it possible to purchase a good or even great used Prevost for the same dollars. We know everything that rolls depreciates. But I think we, Prevost and the converters are all doing ourselves an injustice by not broadcasting how much coach the owner of a used Prevost is getting in terms of value, reliability, quality, and durability compared to a conventional motorhome. If there were a concerted effort to make potential buyers aware of exactly how much they would get with a Prevost conversion compared to a lesser quality and more rapidly depreciating motorhome we would all benefit, including the buyers who migh otherwise have considered a motorhome.

Today's brain dump.

[Bill Price]

Jon:

As usual well thought out and well said!!

[truk4u]

I have a friend who is picking up his 2011 American Heritage in a few weeks and it only listed for 750,000.00 and is trading another plastic coach that is only 3 years old, also bought new, so go figure! I could have a great Prevost just for the upside down money!

[Sawbonz]

Jon,

You're right about needing to educate people. I never knew you Gould buy one under a mill until recently, and POG was a big part of that. I do think the membership to POG is a turn off to many who may otherwise be so educated.

[Sawbonz]

In other words, by the end of the third year the coach is 100% depreciated. If your business is in a 35% tax bracket and you bought a 1.8M coach, you get 630K back compliments the IRS. Then, at the end of three years, you put the coach on the market for 1.17M and you're three year ownership cost was zilch. Repeat as necessary.

Hmmmm, how would a gynecologist justify this?

The real drawback is the need to pay cash to make this worthwhile. We are working folk, who have to borrow for our luxuries!

[travelite]

Hmmmm, how would a gynecologist justify this?

The real drawback is the need to pay cash to make this worthwhile. We are working folk, who have to borrow for our luxuries!

No need to buy it outright. You can borrow the money. According to the IRS, you still own it, even if it's subject to debt.

[Jon Wehrenberg]

If it has a business justification the interest on the debt is deductible.

We bought ours originally for personal pleasure use. We never intended for it to be used for business purposes. But after one year of traveling and seeing all the products we could produce in our factory, including electric power outlets, picnic tables, fire rings, charcoal grilles, etc. we started using the coach to bring us and the displays to trade shows. (www.jamestownadvanced.com) Simultaneous with that I started doing seminars on behalf of a major customer and we used the coach (or my plane) to carry the audio visual stuff and all of the literature and product cutaways for the seminars. Between the two business purposes we were actually using the coach almost 30,000 miles a year for business. The IRS has never taken issue with any of our deductions taken for the coach, which not only included depreciation, but every drop of fuel and every dollar spent on maintenance. Having a business purpose for a coach is like getting a 35% discount on everything associated with owning and operating a coach.

[Denny]

The interest is deductible as a second home whether there is a business use or not.

[Jon Wehrenberg]

From time to time we engage in private and forum discussions on coaches, their value, and details relating to evaluating one. Those of us that are interested cruise through the various sites from time to time just to see what's out there and likely to measure what is being offered for sale against a coach we own or are contemplating.

Today I ran across a coach that I think either has a misprint for the selling price or I am way off base in my thinking of values.

http://www.prevost-stuff.com/1995Pre...CoachSales.htm

To my way of thinking this coach would be a steal. Assuming it was in decent shape as advertised, the price appears well below what I would have expected. I recognize the coach needs work. The belts are missing from the OTR compressor so something is wrong there and that could be expensive. I don't know the age or condition of the tires, air bags, batteries, its maintenance history, if it smells like the bottom of an ashtray, and how clean it really is, inside and out. But at that price a buyer could buy tires and all the other things necessary to bring it into a first class status as far as mechanical reliability and still have pocket money to buy a lot of fuel compared to prices on similar coaches.

Maybe the market still has not hit bottom.