Aircraft Property Tax

[smccray]

1 hour ago, RobertGary1 said:

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   

This

There is a reasonable structure to avoid sales/use taxes setting up a company to lease the airplane- you pay sales taxes on the lease payment rather than the purchase price- but you probably want someone to set that up for you.

20 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 

Likely incorrect.  Most property taxes are due on the assets in the taxing jurisdiction, not the ownership jurisdiction.  If you would owe property taxes owning the plane in your home state, the DE LLC probably owes taxes to the same taxing jurisdiction.  Assuming this is the case, you're not avoiding taxes, you're playing hide and seek from the tax man.

[Mooneymite]

5 minutes ago, smccray said:

Likely incorrect.  Most property taxes are due on the assets in the taxing jurisdiction, not the ownership jurisdiction.  If you would owe property taxes owning the plane in your home state, the DE LLC probably owes taxes to the same taxing jurisdiction.  Assuming this is the case, you're not avoiding taxes, you're playing hide and seek from the tax man.

Exactly.

In Georgia, when you register your plane with the FAA, it sends a notice to whatever state you register it in.  If it's not registered in Georgia, no tax bill is generated.  GA tax law is very specific that if you keep your plane in state, you must prepare a return and you owe the tax.  However, as some of my Georgia acquaintances will verify.....the State of GA does not (usually) snoop around private hangars looking for airplanes, so some owners do avoid paying the tax.

To me, it's cheating, but for some it's just being smart.  Let your conscience be your guide.

[peevee]

20 minutes ago, smccray said:

This

There is a reasonable structure to avoid sales/use taxes setting up a company to lease the airplane- you pay sales taxes on the lease payment rather than the purchase price- but you probably want someone to set that up for you.

 

Who would you have set that up? Attourney? Accountant? Both?

[smccray]

Just now, peevee said:

Who would you have set that up? Attourney? Accountant? Both?

Yes   Have to think about federal taxes, state taxes, general legal implications, as well as FAA regulations when structuring the arrangement.  The management cost isn't an irrelevant consideration.  $100-$150K airplane with a 1% property tax rate?  I would probably just pay the tax man and be done with it.

[peevee]

15 minutes ago, smccray said:

Yes   Have to think about federal taxes, state taxes, general legal implications, as well as FAA regulations when structuring the arrangement.  The management cost isn't an irrelevant consideration.  $100-$150K airplane with a 1% property tax rate?  I would probably just pay the tax man and be done with it.

we're looking at a 300k value at 4 percent, so it's worth exploring, I just don't know how to get from A to B legally. It also looks like we can just structure as a flying club and charge sales tax on the hourly "rental cost"

[smccray]

4 minutes ago, peevee said:

we're looking at a 300k value at 4 percent, so it's worth exploring, I just don't know how to get from A to B legally. It also looks like we can just structure as a flying club and charge sales tax on the hourly "rental cost"

That's a different deal.  There are a few guys that post over on Beechtalk.  The only one that comes to mind at the moment are these guys: http://www.advocatetax.com but I don't know them.  It's a specialty area so I would certainly use someone who can dot i's and cross t's.  

[peevee]

7 minutes ago, smccray said:

That's a different deal.  There are a few guys that post over on Beechtalk.  The only one that comes to mind at the moment are these guys: http://www.advocatetax.com but I don't know them.  It's a specialty area so I would certainly use someone who can dot i's and cross t's.  

We'll give them a shout and see if they can help with either scenario. Thanks

[RobertGary1]

Just to clarify in California we're talking about two different taxes here. 

Sales/use tax - This is paid once based the purchase price. Its about 8%. If you buy in state its "sales tax". If you buy out of state its a "use" tax (privilege of using in California). The address of the owner does not affect use tax, just where the aircraft is "operated".There are exceptions for things like interstate commerce (135). There is also an exception for aircraft purchased for use outside of California. This basically requires the aircraft be kept out of the state for 12 months after purchase. If you move to California don't bring your plane with you if you bought it within 12 months. You need to show insurance out of state, a 12 month lease for hanger, tie down out of state, etc. A friend of mine worked for the state and they busted several people after finding Facebook posts of them with their yachts in California after claiming this exemption. 

Property tax - This is based on where the aircraft is kept. The address of the owner has no affect on this. Airport managers are required by law to do a census and report all aircraft on their field.  This is paid annually and is about 1.15% of the assessed value assigned by the county. You'll fill out a form annually on updates, avionics, etc they tax you on. There is an exemption if you register the plane to a private person (no LLC or corp), the plane is over 35 years old and you display it to the public 12 days a yea. Many airports provide displays for their tenants. 

https://www.boe.ca.gov/pdf/pub79a.pdf

https://www.boe.ca.gov/proptaxes/ahs_exemption.htm

-Robert

Edited October 3, 2017 by RobertGary1

[Guest]

59 minutes ago, RobertGary1 said:

Just to clarify in California we're talking about two different taxes here. 

Sales/use tax - This is paid once based the purchase price. Its about 8%. If you buy in state its "sales tax". If you buy out of state its a "use" tax (privilege of using in California). The address of the owner does not affect use tax, just where the aircraft is "operated".There are exceptions for things like interstate commerce (135). There is also an exception for aircraft purchased for use outside of California. This basically requires the aircraft be kept out of the state for 12 months after purchase. If you move to California don't bring your plane with you if you bought it within 12 months. You need to show insurance out of state, a 12 month lease for hanger, tie down out of state, etc. A friend of mine worked for the state and they busted several people after finding Facebook posts of them with their yachts in California after claiming this exemption. 

Property tax - This is based on where the aircraft is kept. The address of the owner has no affect on this. Airport managers are required by law to do a census and report all aircraft on their field.  This is paid annually and is about 1.15% of the assessed value assigned by the county. You'll fill out a form annually on updates, avionics, etc they tax you on. There is an exemption if you register the plane to a private person (no LLC or corp), the plane is over 35 years old and you display it to the public 12 days a yea. Many airports provide displays for their tenants. 

https://www.boe.ca.gov/pdf/pub79a.pdf

https://www.boe.ca.gov/proptaxes/ahs_exemption.htm

-Robert

Just when I thought taxes were high in Ontario!

Clarence

[N6758N]

I bought my airplane in California but lived in Nevada at the time,  after moving it to PA where it resides now, we got a bill from CA saying I owed sales tax on the purchase. I can't remember the details now but I know I did not end up having to pay the tax. 

[flyboy0681]

On 10/2/2017 at 8:45 AM, cujet said:

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. 

 

 

We don't pay anything to the state or local government. FLA is actually very GA friendly, from tax free maintenance  to relatively low fuel taxes.

[RobertGary1]

7 minutes ago, M20Doc said:

Just when I thought taxes were high in Ontario!

Clarence

Do you have to pay VAT in Canada?

-Robert

[Guest]

6 minutes ago, RobertGary1 said:

Do you have to pay VAT in Canada?

-Robert

In Ontario we have HST, (harmonized sales tax). The province of Ontario gets 8% the Feds get 5%, other provinces have different rates, but federally it's 5%.  It applies to new airplane sales and all maintenance carried out in the province, used airplanes seem to be exempt at the moment unless purchased from a broker.  HST paid by most businesses is recovered.

There is no recurring tax afterward. Counties or cities have no ability to tax other than property tax on real-estate, for which they have an unlimited appetite.

Clarence

Edited October 3, 2017 by M20Doc

[kerry]

5 hours ago, N6758N said:

I bought my airplane in California but lived in Nevada at the time,  after moving it to PA where it resides now, we got a bill from CA saying I owed sales tax on the purchase. I can't remember the details now but I know I did not end up having to pay the tax. 

Better check to see if you have a lean on your plane.  I wouldn't be surprised if you ignored it.

[kerry]

On ‎10‎/‎2‎/‎2017 at 11:38 AM, nels said:

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

I don't think they have property tax on airplanes is Arizona.  You do have to pay a license and place a sticker or tag on your plane.  It's minimal.  I think my friend in Arizona pays about $15 a year for his C150 

[carusoam]

On 10/2/2017 at 2:38 PM, nels said:

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

I love Arizona...

They sent me a tax bill in NJ...

1) The PO lived in Arizona.

2) He sold the plane.

3) Arizona believed the plane owed the tax, and now was living in NJ...

4) Way to go Arizona!

5) my plane wrote a letter to the tax collector in Arizona explaining that she moved...

They deserve a special prize for making ownership of stuff a shade more difficult than neccesary.

NJ has a sales tax based on market value.  Market value of the new plane minus the market value of the old plane...times a given percentage...

Best regards,

-a-

[RobertGary1]

That sounds better than california. One of the reasons i haven’t upgraded my plane is I don’t want to pay $8000 in sales/use tax. If you only paid on the difference that would encourage more sales. 

-Robert