Depreciation on a 182

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Gordon Freeman

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So I'm beginning to narrow down my search of a first airplane, and for more reasons than I care to list, I'm gravitating towards a 182.

I'm really liking the 2004+ model years which came with the G1000. I've trained for my PPL and IFR on the G1000 platform and just prefer the way it integrates it all. I'm also looking for a solid IFR platform, and the G1000 just excels over the steam gauges.

Needless to say, I'm trying to get a better sense of the depreciation of the 182 over - say - a 10 year span. I'd like to get as many numbers down before committing to a purchase to give me a sense of the cost of ownership. I've got insurance quotes, tie-down and hangar costs, fuel and maintenance, but depreciation is certainly the largest piece of the puzzle.

If there are online resources that would answer my question, please feel free to share these with me.

I believe if I wait, I can find a 2004 model year G1000 C182 with 1000hrs on the engine for around 300k. If I were to sell it 10 years later with 1200hrs added to the engine, what could I expect to get?

From my current research in to pricing, I'm expecting it to lose about 120k over that timeframe, but would welcome any feedback.

I understand that ultimately the resale value depends on its condition, hours, history, etc.
 
Is this a business expense/tax benefit purchase? Why is depreciation a factor? I have never bought an airplane I plan on flying thinking what can I resell it for.
 
The used aircraft market is likely to experience a correction within that ten year timeframe and we’re presumably nearing the top of the curve now.

Just realize that in the current market environment, you’re already paying a premium for a depreciated asset, so take that into account with your purchase price. $120k loss over ten years? Possible, but time will tell.
 
Gordon Freeman said:
I'm trying to get a better sense of the depreciation of the 182 over - say - a 10 year span.
Click to expand...
FYI: unless you plan to use the aircraft for a qualified business reason any depreciation is usually moot. And when it is used for business the recovery period is usually 5 or 6 years depending on method.
 
RyanB said:
The used aircraft market is likely to experience a correction within that ten year timeframe and we’re nearing the top of the curve now.
Click to expand...

The selling price of his 182 in 2031 is likely to be close to what he pays for it in 2021. That being said, it will be dependent on how the aircraft is maintained and upgraded.

The number of good aircraft in the 182 fleet will decrease. Some of them will be lost in accidents. A good number of them built in the 1960s and 1970s will age out of economic repair.

Those built between 2000 and 2020 will command a premium. Cessna hasn't built very many 182s in that time period. A 2004 model year aircraft that is maintained and provided with upgraded avionics during its lifetime will be a much desired aircraft.

When I say maintained, that means by 2031 it would be painted and fitted with new seat covers and carpet, and that it would have magnetos and other engine accessories rebuilt or replaced when time limits are reached. Certain avionics will be replaced as time and technology dictate. Wear items like tires, wiring, and systems hoses would be replaced.

The OP mentions the engine on his selected aircraft will have 2,200 hours on it when he envisions selling it. Will it make it to TBO and beyond? He would be remiss if he doesn't plan to rebuild the engine before then. If he doesn't, the value of the plane will be substantially diminished.

The exercise of guessing what aircraft prices will be in ten years is purely speculative. The only thing an aircraft owner can control is how much he is willing to spend on ownership costs as time passes. If the plane is kept current with regular visits to its mechanic along with inflation, paint, interior, and an engine rebuild, I expect it would sell for more than its 2021 purchase price.
 
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I don't think the OP is depreciating for tax purposes, I think he's trying to calculate the total out of pocket if he owns the aircraft for 10 years and then sells it. Any numbers would be a guess, since nobody can predict the used aircraft market in 10 years, but with 2200 hours on the engine (if it makes it that long), you'd be selling it as a run-out engine, so there is $30K is lost value (maybe more in 10 years?). I'm not sure how much value the airframe loses with an additional 1000 hours but probably not a lot. The avionics are a big unknown. The G1000 is great now, but in 10 years when the G3000 is the standard, will buyers look at the G1000 like a G430 is regarded now, acceptable but not really adding value?

I don't really have a good number, but I think it's an interesting way to consider total ownership cost.
 
I think you had the same question in a facebook group...
1.) the G1000 came without WAAS until 2005 (I think), a non WAAS unit has no path of getting WAAS and no pass to upgrade the G1000. While this is priced in currently, I expect those planes to take a nose dive in value to to lack of support and parts for the system
2.) currently around $300k will get you a 182S with steam gauges, a 182T G1000 WAAS is going to be more like $400k (unless you take a run out plane from a flight school)
3.) The market (IMO) is going to climb until sometime in 2022, maybe 2023 and then correct. Over 10 years? Who knows, you may be able to double the value of the plane, or it might become worthless because some new law makes GA "illegal (just look at the $1k landing fee proposal in MA).
4.) If you buy a 1,000 hr engine plane and add 120 hrs per year over 10 years, you end up selling a plane with a very run out engine (2,200 hrs (past TBO) and ~25yrs old). This will scare off many buyers and reduce value.
Gordon Freeman said:
I believe if I wait, I can find a 2004 model year G1000 C182 with 1000hrs on the engine for around 300k. If I were to sell it 10 years later with 1200hrs added to the engine, what could I expect to get?
Click to expand...
You may have to wait 10 years to get that kind of deal, so in that case you can buy and sell same day and lose next to nothing.
 
Thanks for your replies everyone. I did not know that non-WAAS G-1000 could not be upgraded after the fact. That's certainly something to consider. I do factor-in expenses for engine overhaul. At present, my finance breakdown is looking like this. If any current (or past) owner can chime-in I'd certainly appreciate it. The overhaul fund is a bit of an abstract. If I purchase a plane with 1,000 hours on the engine, and she needs overhaul at 2,000, I'll only have saved $20k if I contribute $20/hr to the overhaul fund. However, I also expect some years to have leftover from the maintenance budget. I don't expect to abide by these numbers down to a penny, but I do need a reasonably accurate representation of the overall cost of ownership over a 10-yr period.

SOLE OWNER EXPENSES - based on: 10hrs/month / 120hrs/annum
2006+ C182 w/G1000

=================================
FIXED ANNUAL Ownership Expenses:
=================================

$12,000 - Depreciation ($120k depreciation over 10yrs). Purchase 2006+ model for $350k, forecast value in 2031 = $230k
$600 - Tie-down @ DXR ($50/mo)
$2700 - Insurance
$3000 - Annual Inspection
$4000 - Maintenance
$500 - Avionics Subscription

——————————————————

$23,000TOTAL/annum (rounded)

=================================
VARIABLE-HOURLY Ownership Expenses:
=================================

$68/hr - FUEL (13gph avg., $5.20/gal)
$20/hr - Engine overhaul fund ($40,000 per 2,000hrs TBO)

TOTAL HOURLY: $88/hr

======================================
ANNUAL VARIABLE EXPENSES: $10,500
+ ANNUAL FIXED EXPENSES: $23,000

= TOTAL COST of OWNERSHIP/ANNUM: $33,500

Hourly cost: $279 (based on 120hrs/annum)
 
Maybe it’s just me, but I wouldn’t account for monthly depreciation expense in a situation like this - I just don’t see the purpose for it. Do you pay yourself each month for the cars you own?
 
Gordon Freeman said:
Thanks for your replies everyone. I did not know that non-WAAS G-1000 could not be upgraded after the fact. That's certainly something to consider. I do factor-in expenses for engine overhaul. At present, my finance breakdown is looking like this. If any current (or past) owner can chime-in I'd certainly appreciate it. The overhaul fund is a bit of an abstract. If I purchase a plane with 1,000 hours on the engine, and she needs overhaul at 2,000, I'll only have saved $20k if I contribute $20/hr to the overhaul fund. However, I also expect some years to have leftover from the maintenance budget. I don't expect to abide by these numbers down to a penny, but I do need a reasonably accurate representation of the overall cost of ownership over a 10-yr period.

SOLE OWNER EXPENSES - based on: 10hrs/month / 120hrs/annum
2006+ C182 w/G1000

=================================
FIXED ANNUAL Ownership Expenses:
=================================

$12,000 - Depreciation ($120k depreciation over 10yrs). Purchase 2006+ model for $350k, forecast value in 2031 = $230k
$600 - Tie-down @ DXR ($50/mo)
$2700 - Insurance
$3000 - Annual Inspection
$4000 - Maintenance
$500 - Avionics Subscription

——————————————————

$23,000TOTAL/annum (rounded)

=================================
VARIABLE-HOURLY Ownership Expenses:
=================================

$68/hr - FUEL (13gph avg., $5.20/gal)
$20/hr - Engine overhaul fund ($40,000 per 2,000hrs TBO)

TOTAL HOURLY: $88/hr

======================================
ANNUAL VARIABLE EXPENSES: $10,500
+ ANNUAL FIXED EXPENSES: $23,000

= TOTAL COST of OWNERSHIP/ANNUM: $33,500

Hourly cost: $279 (based on 120hrs/annum)
Click to expand...
Why are you doing this? If I had known then what I knew now about the cost of ownership I never would’ve purchased.
 
Gordon Freeman said:
Thanks for your replies everyone. I did not know that non-WAAS G-1000 could not be upgraded after the fact. That's certainly something to consider. I do factor-in expenses for engine overhaul. At present, my finance breakdown is looking like this. If any current (or past) owner can chime-in I'd certainly appreciate it. The overhaul fund is a bit of an abstract. If I purchase a plane with 1,000 hours on the engine, and she needs overhaul at 2,000, I'll only have saved $20k if I contribute $20/hr to the overhaul fund. However, I also expect some years to have leftover from the maintenance budget. I don't expect to abide by these numbers down to a penny, but I do need a reasonably accurate representation of the overall cost of ownership over a 10-yr period.
Click to expand...
Here is how I see your numbers (for a clean nice plane):

SOLE OWNER EXPENSES - based on: 10hrs/month / 120hrs/annum
2006+ C182 w/G1000

=================================
0wnership Expenses (non regular) over 10yrs:
=================================

$50,000 - Avionics upgrade to Nxi
$40,000 - Repairs
$50,000 - Overhaul engine

——————————————————

$140,000 TOTAL -> $14k p.a.

=================================
FIXED ANNUAL Ownership Expenses (regular):
=================================

$10,000 - Depreciation ($100k depreciation over 10yrs). Purchase 2006+ model for $450k, forecast value in 2031 = $350k
$5,400 - Hangar @ DXR ($450/mo)
$4,000 - Insurance
$1,5000 - Annual Inspection (basic annual)
$800 - Avionics Subscription (you want charts and all)
$14,000 (from above)

——————————————————

$35,700 TOTAL/annum (rounded)


=================================
VARIABLE-HOURLY Ownership Expenses:
=================================

$84/hr - FUEL (14gph avg., $6/gal) - Fuel assumption to increase 3% p.a. due to inflation
$6/hr - Oil - Camgaurd

TOTAL HOURLY: $90/hr

======================================
ANNUAL VARIABLE EXPENSES: $10,800
+ ANNUAL FIXED Regular EXPENSES: $21,700
+ ANNUAL FIXED UnRegular EXPENSES (avg.): $14,000

= TOTAL COST of OWNERSHIP/ANNUM: $46,500

Hourly cost: $387 (based on 120hrs/annum)
Paid Cash adding lost capital gains ($510 -> $900 per hour)

Now, if you pay cash assume 10% of lost capital gains per year
 
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I should note, that there are things that are trade-offs.
You can save on Hangar and get a tie-down, but this may cost you a paint job or reduce resale value
You can not do an Nxi upgrade, but reduce resale
etc....
 
@Gordon Freeman OP, I think you're absolutely right to consider depreciation especially for a more recent plane. 2004ish is a little bit in-between the fully depreciated planes of the 60s and 70s, and nothing like the depreciation that will be experienced by buying new, but it could be your largest "expense" in the total cost of ownership.

That said, if you think about the things that will increase or decrease supply and demand, there's a pretty good argument to say that the plane will hold its value over time even thought it is newer and more expensive. As a thought experiment, you could try to examine how much the plane has actually depreciated since when it was purchased, because it's probably not that much (a 182 new in 2004 was much less expensive than a new 192 in 2021, perhaps to the point that that era of 182 may not have depreciated much at all).

FWIW, I do take some comfort in the knowledge that the value of the old planes I have always bought is almost certainly not going to go down for depreciation reasons (i.e. they might lose value due to market changes or more hours on the airframe / engine). My first plane I sold for $500 less than I bought it for after putting 400 hours on it. My second I lost a bit of money on but that's a whole 'nother story not related to depreciation, and my third plane has nearly tripled in value since I bought it. I don't think any of those outcomes would be true with a brand new or recently new plane.
 
TimRF79 said:
Here is how I see your numbers (for a clean nice plane):

SOLE OWNER EXPENSES - based on: 10hrs/month / 120hrs/annum
2006+ C182 w/G1000

=================================
0wnership Expenses (non regular) over 10yrs:
=================================

$50,000 - Avionics upgrade to Nxi
$40,000 - Repairs
$50,000 - Overhaul engine

——————————————————

$140,000 TOTAL -> $14k p.a.

=================================
FIXED ANNUAL Ownership Expenses (regular):
=================================

$10,000 - Depreciation ($100k depreciation over 10yrs). Purchase 2006+ model for $450k, forecast value in 2031 = $350k
$5,400 - Hangar @ DXR ($450/mo)
$4,000 - Insurance
$1,5000 - Annual Inspection (basic annual)
$800 - Avionics Subscription (you want charts and all)
$14,000 (from above)

——————————————————

$35,700 TOTAL/annum (rounded)


=================================
VARIABLE-HOURLY Ownership Expenses:
=================================

$84/hr - FUEL (14gph avg., $6/gal) - Fuel assumption to increase 3% p.a. due to inflation
$6/hr - Oil - Camgaurd

TOTAL HOURLY: $90/hr

======================================
ANNUAL VARIABLE EXPENSES: $10,800
+ ANNUAL FIXED Regular EXPENSES: $21,700
+ ANNUAL FIXED UnRegular EXPENSES (avg.): $14,000

= TOTAL COST of OWNERSHIP/ANNUM: $46,500

Hourly cost: $387 (based on 120hrs/annum)
Paid Cash adding lost capital gains ($510 -> $900 per hour)

Now, if you pay cash assume 10% of lost capital gains per year
Click to expand...

10% guaranteed a year every year for 10 years guaranteed return? Who is your fiancial guy? I want in.
 
On average a broad market stock index fund will give around 10% ish
 
Most depreciation on a 2004 plane has happened. It is less like buying a new car and selling it in 10 years vs buying a house or condo built in 2004.
 
One thing that stands out to me is the predicted cost of overhaul, I'd highly doubt $30k will get you an engine, let alone installation.

I've been getting 24% per year out of the market, but it is by no means guaranteed. And, the market for airplanes, and the stock market will both take a BIG hit some time in the next 6 to 16 months. I am waiting for the market to crash and then I'm going to buy a Mooney Rocket or something else fast.
 
If he runs the motor out in 10years I am thinking the overhaul alone will push $65K+ then. That is probably the easiest depreciation to swag. Skylanes with G1000 seem to run at a minimum $100K more than other panels. But the mentioned non-WAAS version might add another hit of $40K or so. So I would go with over $100K deprecation just from flying it and the G1000 quirk. Even though 182's are really getting snapped up, there are still a lot of them and a lot of the older ones can burn MOGAS if 100L goes unobtainium. But the later model 182's will be more desireable over the years I think. I think there will be a market correction but over 10yrs it will most likely recover most of the drop. So I would guess overall depreciation between $90k...$125K.
 
How much does it cost to fly? I don't know, I just do it. What will my plane be worth in 10 years? I don't know, I just fly it.

I fly because it releases my mind from the tyranny of petty things -- like worrying about what it costs!
 
Here is the summary:
A Hobby costs you money, otherwise it is a business.
Therefore I think the cash flow view is more important than book items such as depreciation or averaged costs.
Because you got to have the cash to pay whatever bills you have, simple as that.
 
Well, I appreciate those of you with seemingly endless supply of disposable income, but flying - as fun as it is - is one of the most expensive "hobbies", so having some grasp of its cost is a reasonable question.
 
AA5Bman said:
@Gordon Freeman OP, I think you're absolutely right to consider depreciation especially for a more recent plane. 2004ish is a little bit in-between the fully depreciated planes of the 60s and 70s, and nothing like the depreciation that will be experienced by buying new, but it could be your largest "expense" in the total cost of ownership.

That said, if you think about the things that will increase or decrease supply and demand, there's a pretty good argument to say that the plane will hold its value over time even thought it is newer and more expensive. As a thought experiment, you could try to examine how much the plane has actually depreciated since when it was purchased, because it's probably not that much (a 182 new in 2004 was much less expensive than a new 192 in 2021, perhaps to the point that that era of 182 may not have depreciated much at all).

FWIW, I do take some comfort in the knowledge that the value of the old planes I have always bought is almost certainly not going to go down for depreciation reasons (i.e. they might lose value due to market changes or more hours on the airframe / engine). My first plane I sold for $500 less than I bought it for after putting 400 hours on it. My second I lost a bit of money on but that's a whole 'nother story not related to depreciation, and my third plane has nearly tripled in value since I bought it. I don't think any of those outcomes would be true with a brand new or recently new plane.
Click to expand...

Thank you! A most thoughtful reply. If one factors in inflation and money factor, then I suppose the argument holds true that the aircraft may very well hold its present-day dollar value. I'm going to take a few test flights in the 182 and take it from there. My wife continues to praise Cirrus' parachute as a safety measure, especially after the recent midair collision at Centennial airport, but I believe a better (and cheaper) safeguard is a pilot who keeps his eyes open and doesn't blow through the base leg at 150 knots.
 
You can always add a BRS to a 182
 
2004 year had the option of Nav 2(steam) or 3(G1000). We run a Nav 2 upgraded with GTN750 and G5s. They may be a little less than G1000 and you can keep upgrading with the latest touchscreens.
 
If depreciation amount is a concern, the uncertainty of depreciation can be reduced with older airframe and recently-installed-by-former-owner avionics.

Then market conditions become less of a variable to price volatility. But then airframe popularity becomes a factor to depreciation too (ease of resale for instance).

Powerplant is gonna be a wash, you pay for time remaining to TBO.
 
FWIW newer is not necessarily better in the eyes of the beholder. I’m really turned off by the heavier weights of the new 182s and especially 206s. I find it interesting that even though there were orders of magnitude more 60s and 70s era 206s, there are way more post-1999 ones for sale on the used market.
 
From what I've read, as a general rule, airplanes decline in value for the first 20 years, then bottom out and start slowly appreciating over time.

When the G1000 came out, it was a miracle of modern technology, and the only way to get flat panel capability was to buy a new plane, or pay an insane sum for a retrofit. But nowadays there are so many affordable retrofit options available, plenty of shops with experience, and STC's for most common GA aircraft. It does not make sense to limit your search to a small subset of the fleet. Why pay $300-400K for a newish 182 with G1000 when you can pay $150K for a well kept older 182 and put $50k into a G3X panel makeover.
 
For the budget I’d be looking at a better performing only like a p-ponk’ed 182 on the used market and upgrade panel yourself.
 
Ed Haywood said:
Why pay $300-400K for a newish 182 with G1000 when you can pay $150K for a well kept older 182 and put $50k into a G3X panel makeover.
Click to expand...
Well the restart 182's have the fuel injected Lycoming IO540 instead of the Continental O470 as well as a number of cabin improvements such as 26G seats. The 6-pack restarts might be the best of both worlds.
 
FWIW- We bought a 182 in 1983 (1973 model P) for $20k and sold it in 1996 for $45k in about the same condition as bought (new paint/new engine/some new avionics). So over 10 years it basically doubled in sale value. But we spent way way WAY more than the added value in operating costs during ownership.
 
AA5Bman said:
FWIW newer is not necessarily better in the eyes of the beholder. I’m really turned off by the heavier weights of the new 182s and especially 206s. I find it interesting that even though there were orders of magnitude more 60s and 70s era 206s, there are way more post-1999 ones for sale on the used market.
Click to expand...
Yep, new ones are 2000lbs empty! My 81 is basically the same airframe and it’s 1795 empty... same gross weight
 
You are right. Nothing is guaranteed. It’s a high probability estimate.
 
BTW - my plan? Buy a mid to low time engine 182. Put in a stupid amount of expensive updated instruments. Fly until I can’t. Sell for whatever I get. Flying has nothing to do with sound financial management. If I avoid a catastrophic expense - $40k annual because of a bad spar or landing gear saddle - I’m good.


Spend and give away the inheritance!
 
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