Aircraft Property Tax

[Brent]

I'm seeking information on aircraft property tax in California. I've done some searches and can't seem to find any methodology other than "tell us about your airplane, and we'll send you a tax bill."

This will be non-business, personal use only. Yet another field I'm trying to fill in on the buy-an-airplane spreadsheet... I don't know whether to assume $1000 or $10,000 for a $100,000 airplane. 

Thanks for any insight.

[Jim F]

Hi Brent,

1% of the value yearly.  They love to over value so you just keep them honest.

jim

[Skates97]

I put mine in at what I paid for the plane. The tax bill came back with the value roughly 1/3 of what I had put down. I was more than happy to pay that bill.

[kortopates]

@Jim F nailed it. The state property tax is 1% ever since Proposition 13, but every county has add-on's from various bonds voted in bringing it up to maybe 1.1% or more, so just google the property tax for your county/city. Then each county has their own method of assessing value which they will do on their own. The only thing the purchase prices seems to really count for is the sales or use tax you will owe the Ca Board of Equalization (BOE) - which is based on your  city/county sales tax rate for the purchase tax from the bill of sale. There was a program that allowed private owners to avoid CA sales tax when I bought mine (which I took full advantage of) but that program was ended years ago. From what you read on the internet, it appears a fair number of owners try to escape the sales tax by not reporting it but that's silly as there is no way to hide it unless you are parking your aircraft in your garage or something like that. Every airport FBO, hangar lessor etc is required to know before renting and report to the county the N number for any space or hangar they rent/lease. When they figure out the sales tax wasn't paid for whatever reason, I hear they stick them with penalty's and interest just like any past due tax. It doesn't matter if you bought it out of state, acquired it under a LLC, or even registered it in another state. You rent a hangar or ramp space to park it her in CA you'll owe the sales/use tax unless you brought it under the remaining tax free program with letter of exemption from the BOE which these days is limited solely to business use. But another crazy thing discussed here regarding CA is that some airports are known for passing on the hangars annual property tax bill to the renter. Seems crazy, although we know we're paying it as well as the utilities regardless of how its billed. if anyone is spending multiple hundred thousands I'd recommend contacting a professional in this area; especially if you can claim business use. 

Some other states are even worse, we've read here on MS owners parking their Mooney's in FL for a few months for maybe maintenance and then getting a property tax bill from FL.   

[ArtVandelay]

There is no personal property tax in Florida, there is a 6% sales tax, Florida has no sales tax on maintenance.

[kpaul]

Just now, teejayevans said:

There is no personal property tax in Florida, there is a 6% sales tax, Florida has no sales tax on maintenance.

Some counties in FL hit you with a Use Tax in addition to the sales tax. 

[DAVIDWH]

Hmm,

i think it all depends on the political venu you are dealing with. Always remember you are going to be ratted out by the FAA, no matter how you slice the pie. They immediately inform your local tax boys upon registration of your aircraft.

As for me, I registered Aircraft as a Delaware Corp. and paid nothing. Did receive one phone call, no certified mail, from tax office. After I told him the aircraft was not even in the state, he went away and never called again.

According to Kortopates above response, Not sure how long you could stay in ground effect with a Delaware corp. in Calif. (Looks as if the juice may not be worth the squeezing).

just saying it worked for me in another state.

Best of luck

[cujet]

12 hours ago, kpaul said:

Some counties in FL hit you with a Use Tax in addition to the sales tax. 

I am unaware of this. I think the state of FL imposes a "use tax" of 6% if an aircraft is purchased outside the state of FL, and brought into the state for more than 20 days (with a number of exceptions) I am unaware of any FL counties charging a use tax. 

 

CA will want to know your engine time since overhaul, to calculate a pro-rated tax, based on engine hours remaining. I overhauled my engine myself, for $6,600. CA wanted to tax me on an engine value of $35,000. I chose not to move there. 

[ArtVandelay]

North Carolina has PPT, I know marinas have send a list of boats at the marina as of January 1st, I assume airports will do the same for their planes. Pennsylvania also checks US boat registrations (hailing ports) and deems you a PA resident and send you a nasty letter why you didn't pay SIT.

[peevee]

Co has use tax at 4 percent of the purchase price. It's gross.

[jaylw314]

17 hours ago, kpaul said:

Some counties in FL hit you with a Use Tax in addition to the sales tax. 

If I understand correctly, "use tax" is just another way to apply sales tax.  If you live in a state that charges 10% sales tax and did not pay sales tax on a plane you bring in, you now owe that 10%, it's just called "use tax".  If you already paid 6% sales tax when you bought it in another state, they will charge you 4% use tax.  yuck. 

I thought I saw a news story a few years ago that FL and ME were trying to apply use tax to ANY aircraft landing in the state, but that they later backed off.  I don't know what the details of what the outcomes were, but when I did some research on CA, they specifically noted that maintenance was not an example of substantial use.

Property tax is a different animal.  Check to make sure there are not exceptions for vehicles and aircraft

I guess I'm stuck living in OR as long as I own my plane--no sales or use tax, and no property tax for private aircraft.

 

[peevee]

Can I borrow your Oregon address to register ours? Hah.

[Kale McManus]

Look in trade a plane for the place in Delaware get you a llc through them I really can't remember  exactly but I think mine is $180.00 a year anyone can do it only takes an hour or two to file fax papers back 

[jaylw314]

IIRC, LLC can shield you against being identified individually in a lawsuit (which is fairly unhelpful if you are the sole owner of the plane).  It does not shield you from tax liability, and I think states can come after you after the fact for those taxes if they are motivated to find you.  And I'm guessing most states are motivated to come after aircraft owners they think are delinquent on taxes.

28 minutes ago, peevee said:

Can I borrow your Oregon address to register ours? Hah.

Yes, but only if I get to keep your plane  

[ArtVandelay]

Look in trade a plane for the place in Delaware get you a llc through them I really can't remember  exactly but I think mine is $180.00 a year anyone can do it only takes an hour or two to file fax papers back 

If you are tying down or have a hangar, it doesn't matter; they will simply send a tax bill to the address of LLC, etc. You will have to pay the tax.
If you move around a lot and don't leave it anywhere, then it might work, seems like more trouble than it's worth.

[nels]

How does Arizona treat the aircraft owner/snowbird in an airpark?

[peevee]

1 hour ago, Kale McManus said:

Look in trade a plane for the place in Delaware get you a llc through them I really can't remember  exactly but I think mine is $180.00 a year anyone can do it only takes an hour or two to file fax papers back 

What I've read is that doing that is basically a waste of time and money and then makes it harder for you to prove the plane isn't used for commerce.

[Kale McManus]

4 hours ago, peevee said:

What I've read is that doing that is basically a waste of time and money and then makes it harder for you to prove the plane isn't used for commerce.

It is totally up to you me and lot of people do it out of Delaware some out Florida some out of Montana hut it's your choice 

[peevee]

Just now, Kale McManus said:

It is totally up to you me and lot of people do it out of Delaware some out Florida some out of Montana hut it's your choice 

http://aeromarinetaxpros.typepad.com/my_weblog/2012/08/registering-your-aircraft-in-a-delaware-llc-can-be-the-dumbest-thing-youve-ever-done-.html

 

That guy knows a lot more about it than I do.

[RobertGary1]

13 hours ago, Kale McManus said:

Look in trade a plane for the place in Delaware get you a llc through them I really can't remember  exactly but I think mine is $180.00 a year anyone can do it only takes an hour or two to file fax papers back 

The Delaware LLC may hide you from the state but it in no way reduces your tax. State law says simply basing (as of Jan 1)  in California imposes the tax. By law the airport manager is required to report all aircraft based there. So if you get your Delaware llc you also need to find an off grid field. 

 

In your spread sheet also include a one time sales/use tax of approx 8% of the purchase price. That’s one time, property tax is annual. 

Welcome to california.

 

-Robert

[midlifeflyer]

10 hours ago, peevee said:

http://aeromarinetaxpros.typepad.com/my_weblog/2012/08/registering-your-aircraft-in-a-delaware-llc-can-be-the-dumbest-thing-youve-ever-done-.html

 

That guy knows a lot more about it than I do.

He does.

Delaware's reputation as a good state to incorporate small businesses things like aircraft and boat ownership  has a number of sources. One is that major corporations tend to incorporate there. They must know something, right?

They do, but most of it has to do with a legal structure and court precedent which is historically consistent and very favorable to those large national and international businesses. They have pretty limited relevance to our level of private aircraft ownership. That’s not to say no light aircraft owner will benefit; that’s ultimately a decision based on factors discussed with knowledgeable professional advisors.

[bob865]

I'm looking for the article now and will post it when I find it.  But per the AOPA using an LLC to register a plane doesn't make sense in most cases.  It doesn't shelter you from taxes and it doesn't actually shelter you from liability.  If you have an accident, you, the pilot, are liable for the accident regardless of the ownership of the airplane.  The article mentions that it isn't even practical to do it for partnerships.  Also per the FAA, taxes are on where the plane is based, not on where it is registered.  It might actually increase your taxes in states that have use taxes.  If it is registered out of state you will have to pay a use tax where if you register it in state you just have to pay personal property tax.

[bob865]

Found it faster than expected:

https://www.aopa.org/training-and-safety/pic-archive/aircraft-ownership/incorporation-for-aircraft-owners

 

[RobertGary1]

Before going public our attorney had us reincorporate in deleware because laws for public traded companies and investor liability were more favorable. Hardly a consideration for a Mooney. 

Anyone claiming it reduces liability for sale/use tax or property tax in California is scamming you  Actualy it may make it worse  It precludes you from applying for historical aircraft status which provides some property tax relief  

-Robert 

Edited October 3, 2017 by RobertGary1

[Bart Chilcott]

Being an aviation state and home to Wichita (air capitol of the world) Kansas has very friendly aviation taxes.  Zero property tax or use tax on aircraft 30 years old or older used for private purposes.  However, that all changes if you register it in your business name.