Aircraft purchase tax saving strategies

[Mooney Dog]

4 hours ago, Ragsf15e said:

it only works with personal sales, not with from brokers who have purchased the airplane to sell it.

Bought mine from a guy cleaning out his hanger who's wife said "you have to many airplanes." I think that would count. 

[TNIndy]

On 8/21/2021 at 5:59 AM, Brandt said:

Well, the easiest solution would be to move to Indiana…..

But, absent that I suggest you have a conversation with www.aviationtaxconsultants.com 

 

Does Indiana not have a sales tax on aircraft? 

[Brandt]

On 8/23/2021 at 3:02 PM, TNIndy said:

Does Indiana not have a sales tax on aircraft? 

It does, but it is lower than IL and IN does not tax avgas or repairs.  Income, corporate and property tax rates are significantly lower too.  The consultant reference I posted deals with he sales tax issue.

[TNIndy]

Thanks, I am in the middle of a purchase and will have the option to register in TN or Indiana because my time (Hanger time) will be fairly evenly split

[neilpilot]

1 hour ago, TNIndy said:

Thanks, I am in the middle of a purchase and will have the option to register in TN or Indiana because my time (Hanger time) will be fairly evenly split

May not be particularly relevant to your situation.  Should I assume by "register in TN" you mean use your TN address on paperwork to the FAA?

I've owned a couple of aircraft that were "registered in TN".  However I was able to decline paying use/sales tax to TN since they were kept in a hangar across the river in AR.  

[Ragsf15e]

54 minutes ago, neilpilot said:

May not be particularly relevant to your situation.  Should I assume by "register in TN" you mean use your TN address on paperwork to the FAA?

I've owned a couple of aircraft that were "registered in TN".  However I was able to decline paying use/sales tax to TN since they were kept in a hangar across the river in AR.  

If you live close to a state line and have the ability to keep the airplane in either state, it’s definitely worth researching how it will be taxed - what tax each state has, how they decide (home address, faa registration, aircraft hangar location), yearly vs 1 time fee, etc.  you could potentially use an llc based at your hangar vs home address?

[TNIndy]

Yes, my S-Corp is a TN Corporation so I will use the TN address but since I have a hanger rented in Indiana I should be able to do the same as you. It looks like Indiana is a little less with a straight 7% tax vs. TN's tax of 7% plus other taxes

[Will.iam]

On 8/21/2021 at 9:44 PM, Mooney Dog said:

Welp this would have been nice to know.... 

so if i keep all my sales receipts of avionics upgrades that i lose half value on and installation labor i should  be able to get my profits from the sale under $3000   Haha not funny really. 

[ArtVandelay]

so if i keep all my sales receipts of avionics upgrades that i lose half value on and installation labor i should  be able to get my profits from the sale under $3000   Haha not funny really. 

That’s not really true, if you look at ads you’ll see a significant premium for modern (glass) panels. As technology has advanced and buyers are younger and no longer look fondly at steam gauges it’s going to get tougher to sell planes that haven’t been upgraded other than a 430 GPS with it’s 320x200 color screen.

[Shiny moose]

My county(Jasper County Missouri) yearly personal poroperty tax is based not only on the value of the airplane but on the hours flown, I get called each year asking how many hours I have flown. 

[Will.iam]

2 hours ago, Shiny moose said:

My county(Jasper County Missouri) yearly personal poroperty tax is based not only on the value of the airplane but on the hours flown, I get called each year asking how many hours I have flown. 

What pain. So do you pay less if you fly less or if you fly more?

[Shiny moose]

10 hours ago, Will.iam said:

What pain. So do you pay less if you fly less or if you fly more?

Yup, 100 hours personal property tax was 990. 30 hours it was 126.  I would have to look up the law to be exact but its something like aircraft over 30 years old if flown more then 40 hours per year are considered at higher luxury rate.

[MikeOH]

10 minutes ago, Shiny moose said:

Yup, 100 hours personal property tax was 990. 30 hours it was 126.  I would have to look up the law to be exact but its something like aircraft over 30 years old if flown more then 40 hours per year are considered at higher luxury rate.

HOLY CRAP!  $990

Damn, I thought California was bad, but it's a fixed 1% on assessed value regardless of how much you fly.

[Shiny moose]

Missouir is not an aviation friendly state! 

[Will.iam]

With ads-b i could see how they enforce that but i wonder how they did 10 years ago. Especially the j-3 cubs that don’t even have a radio. How did they track the hours? Or people who fly ultralights etc. 

[jaylw314]

On 8/27/2021 at 4:58 PM, TNIndy said:

Yes, my S-Corp is a TN Corporation so I will use the TN address but since I have a hanger rented in Indiana I should be able to do the same as you. It looks like Indiana is a little less with a straight 7% tax vs. TN's tax of 7% plus other taxes

If the "other taxes" are classified as use tax, it may not matter, since any significant activity in TN may trigger a demand for use tax not already paid as sales tax to another state.  For most states, if use tax is due, you get a credit for any use/sales tax already paid to another state (although the burden of proof would be on you). So if you paid 7% in IN, and use tax was 7.5% in TN, you'd have to cough up the 0.5% in difference.  We've been hearing stories of states aggressively pursuing aircraft use tax for any significant use in that state (as little as a few trips or a few weeks in residence).  I recall stories about Florida and a couple New England states, but I suspect various states across the country see things that way.

Edited August 29, 2021 by jaylw314

[A64Pilot]

17 hours ago, Will.iam said:

With ads-b i could see how they enforce that but i wonder how they did 10 years ago. Especially the j-3 cubs that don’t even have a radio. How did they track the hours? Or people who fly ultralights etc. 

The same way they do it now because biz jets don’t get tracked by ADSB , by some magic.

Most J-3’s, Ultralights don’t excite them. My 1946 Cessna wouldn’t likely either, just not a lot of money there, same reason a cop doesn’t stop you until your more than 10 over the limit.

But they walk the ramps and ask for lists of hangar rentals, used to be they didn’t care about hole in the wall Ga, they only looked in Atl and other places where the big bucks hung out. so it was more common than not to never get a tax bill if you were based Camilla or Moultrie or wherever.

The use tax can get ugly pretty fast, in Fl I believe all it takes is 20 days and you owe Fl a bunch of money, so be careful visiting Fl.

However it seems most often what trips the tax man is registration, you buy an airplane and register it with your home address, next year your getting a letter from the tax man in your County, because apparently it’s pretty easy for them to get a list of all aircraft registered in their County.

If it’s Registered to an LLC in a State that doesn’t tax airplanes, then maybe you don’t get that letter? But I bet renting a hangar and giving them your home address may well get you a letter?

Edited August 29, 2021 by A64Pilot

[JoeM]

Two things have yet to be mentioned:

1. The federal interstate commerce exemption trumps and can avoid all state aircraft taxes on purchases (not annual use taxes). I live in a high tax, aggressive enforcement state so I know. Pm me for details.

2. In CA, they drive airports and send tax notices to the FAA registered owner /address. If it is an LLC in a no-info state like WY, it becomes uncollectible. Of course they can use a boot lock if it’s tied down on the ramp and you leave it long enough.