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Taxes for new RV purchase

polkaking27

Active Member
I just bought an RV-8 and its my first aircraft purchase. I have a couple total newb questions. Am I going to have to pay sales tax on the purchase??? Holy ****, If I do thats gonna be a big tax bill. How about state tax or property tax.

I have 2 options. I currently live in the DFW area but will be moving back to Utah in the next month or 2, so I could probably get away with registering it either place. Does anyone know if either of those places are good airplane tax states. Sorry for the dumb questions, but if I can save some money on more taxes that would be great
 
Texas charges no sales tax on a "casual sale" between individuals and charges no yearly use taxes. I bought my rv6 3 years ago and have never seen a bill from anyone. Not sure about Utah.
 
You may want to call AOPA on this. (If you aren't an AOPA member, you should be.) Every state has their own rules on taxes, and they can be extremely aggressive on collecting them. Remember, airplanes can be $25k Skyhawks or $25m Citations. That's a lot of potential tax money. Some states have weird rules about basing, taxes previously paid, etc....

Congrats on the plane! Yeah, it comes with baggage like taxes, insurance, hanger rental, etc.. but owning a plane is just awesome. You are going to love it!

DEM
 
State Form

Get your seller (a little after the fact, now) to sign this State form:

https://comptroller.texas.gov/forms/01-917.pdf

It?s a statement of occasional sale, no tax will be due.

I bought mine out of Ohio, had the seller fill it out, ?just in case?.

Never heard a peep outta the State....(I?m in Texas, too.)

Welcome to the RV Club!
 
Strangely enough, the tax rich state of (T)Massachusetts charges no sales tax on aircraft. We pretty much get the stick on everything else!

No sales tax was amazing to me, as was the $5 FAA registration fee that is good for 3 years. I can't imagine that $5 covers the cost of processing the registration!
 
In TN, I didn't pay the sales tax on my 10 when I bought it in CA.

CA didn't charge as long as you and the aircraft left the state within 48 hours, which I did.

TN eventually did eventually send me a tax bill, nearly two years after the purchase.

There was some accrued interest, so it would have been better to have paid it out right. But it wasn't much. I think keeping the money in the stock market for that period of time was a much better deal.
 
WA sales tax...

is generally pretty bad. I'm almost done building a basic -9 and tried to get the tax part over with. The "pro" in Olympia said it had to be completed before I could pay tax because it would probably be worth more than the sum of it's parts (which would include my labor!) and they want to be sure to get the correct amount of tax.
Amazing how this differs so much from state to state.
I think I wanna move to Texas. The cash saved in taxes would pay the mover...:)
 
WA sales tax...is generally pretty bad. I'm almost done building a basic -9 and tried to get the tax part over with. The "pro" in Olympia said it had to be completed before I could pay tax because it would probably be worth more than the sum of it's parts (which would include my labor!) and they want to be sure to get the correct amount of tax.

This makes NO sense. SALES tax is based on the price you paid for the item, not some assessed valuation.

PROPERTY tax is based on assessed value, and yes, the assessment is done after completion of the aircraft (or boat or car or whatever). But sales tax is just...sales tax.
 
Strangely enough, the tax rich state of (T)Massachusetts charges no sales tax on aircraft. We pretty much get the stick on everything else!

No sales tax was amazing to me, as was the $5 FAA registration fee that is good for 3 years. I can't imagine that $5 covers the cost of processing the registration!

No - we don't have a sales tax, it's true. But we do have a yearly "property tax" that we have to pay. It's done by weight. For an 1130lb RV-8 it's $100 a year.

You get to place a nice sticker on your plane each year.

Lovely
 
Wow, thanks so much for the info guys. I think the bank may have registered it to my Utah address because I know I'll always own that home but I'll be in Texas for the next while but not at any permanent addresses. Hopefully that registration address doesn't hose me. If it does can I change it? I'm not sure what I'd change it to though, my address is transient down here for now.
Thanks for the occasional sale form. I will have him fill that out. Do I need to submit that form to anyone, or just keep it in my records???

thanks again guys, super helpful.
 
Keep it in my Texas hangar and you can use my address. I'll make sure the cylinder walls keep lubricated. :)
 
What about CA

Does anyone know the in's and out's regarding purchasing a kit, parts, etc outside of California and sales taxes? Has anyone peeled the onion in such a way as to not have to legally pay California's high sales tax.
I hear that once the plane is complete the county within CA will assess it and you pay 1% every year.
Ouch!!
 
Utah

Yes, we have a 6.XXX% tax rate here in Utah and then your annual registration will be $125/year.

I do know that many people are registering in Montana and taking advantages of a "loop hole" in the system. I know there are cases on both the win and lose side of doing this but it is common practice with big RV purchases. Just Google, "Montana registration". I have no experience with it and just paid the Utah tax when I finished my plane.

Yes, plan for a big check at the end of the project if you have personal property tax in your state.
 
Does anyone know the in's and out's regarding purchasing a kit, parts, etc outside of California and sales taxes? Has anyone peeled the onion in such a way as to not have to legally pay California's high sales tax.
I hear that once the plane is complete the county within CA will assess it and you pay 1% every year.
Ouch!!

You have it right - 9% (depending on county) sales tax on all components as you buy them. Once it?s got its Airworthiness certificate, your county will send you an annual property tax bill (about 1% of value). The property tax assessment date is Jan 1, so if you can postpone your A/W inspection from Dec to Jan you?ll save one year of property tax. Buying or taking delivery of parts outside of CA won?t help: CA has a ?use tax? on property brought into the state (and the rate just happens to be equal to the sales tax rate.). The state is pretty pro-active at tracking down aircraft owners. And there is a penalty for paying sales/use tax late.
 
TEXAS.

Yep this idea was floated back in the early 80's in TEXAS. After a lot of talk of rope to thumbs in Austin the idea kinda went away. For a privet small aircraft TEXAS is a good place to be for now.
I still try to park mine there as often as I can. Yours, R.E.A. III # 80888
 
One CA builder's experience

Just a note for other pre-taxed CA builders how it worked out for me.

A few years ago, I put down a big chunk o' cash on the "use tax" line of the regular CA state return. It covered use/sales tax on major subkits from Vans and large items (Dynon avionics not bought from Aircraft Spruce) I had acquired over my long, ultra-slow build. Oddly, there's no place on the return to itemize what the use tax was for...CA accepted the money anyway. :rolleyes:

In 2017, N748PK appeared in the FAA registry, I got a letter from CA use tax folks--if you bought this aircraft out of state, you may owe use tax, fill out this form, etc.

I wrote a cover letter 'splaining I didn't buy an airplane but home-built kits & parts. I stapled copies of the relevant receipts and a copy of page 1 of the CA return showing use tax already paid to the form. Also enclosed a check for small money because the use tax rate on the form was different from Alameda county's historical rates. For such a small amount I decided not to poke the CA bear.

Last week got a letter from the use tax folks, stating my "case number" was closed. Although many of the receipts antedated the year I paid the big hunk o' use tax, I made no effort to call that out in the cover letter, and nothing about late fees and interest charges said by the tax man.

I also got the other letter from the Alameda County assessor, seeking information to appropriately value N748PK aircraft as of 1 Jan 2018. I gave them make, model, engine, avionics installed, etc. I checked off "poor" for exterior and interior condition, because the definition of poor included extensively weathered or damaged paint, and N748PK had no paint on it and no interior furnishings (seat cushions, seat belts) as of 1 Jan. Moreover, the definition of "aircraft" in the CA tax code is an aerial conveyance that has flown at least once.

While I aspire to final inspection, special a/w cert, and first flight sometime this year, technically N748PK should incur zero property tax liability for now....

DISCLAIMER: The foregoing neither constitutes tax advice nor an offer to provide tax advice. Your mileage may vary. Consult your personal tax adviser, not internet chatter, before investing or sending money. Watch out for falling meteors. Get enough fiber.
 
Do you see anything wrong with registering the plane in another state? Looking at the Bill of Sale and Aircraft Registration Form, there's no other identifying information you need to provide other than name and address. So for someone who lives in CA and has a relative in TX, can he just register the plane with his name and his relative's address in TX to avoid paying CA taxes?? (This is not me of course - I am very grateful for paying my taxes to the wonderful state of CA =)) But ya know, some people are like that...

Are there any other tax-friendly states besides TX?
 
Do you see anything wrong with registering the plane in another state? Looking at the Bill of Sale and Aircraft Registration Form, there's no other identifying information you need to provide other than name and address. So for someone who lives in CA and has a relative in TX, can he just register the plane with his name and his relative's address in TX to avoid paying CA taxes?? (This is not me of course - I am very grateful for paying my taxes to the wonderful state of CA =)) But ya know, some people are like that...

Are there any other tax-friendly states besides TX?

I'm pretty sure state tax authorities have this one figured out :)
 
I'm pretty sure state tax authorities have this one figured out :)

How? How do they know it's the same person? There's no identifying information except name. Some names are very common. What's to make the state tax guys say that there can't be a John Smith in CA and one in TX who own airplanes?

Are you saying my friend shouldn't do this because they'll figure him out?
 
State sales tax

Does anybody have any information on Georgia? I have a Delaware Corp and will register my RV to that Delaware Corp but base it in Georgia.
 
How? How do they know it's the same person? There's no identifying information except name. Some names are very common. What's to make the state tax guys say that there can't be a John Smith in CA and one in TX who own airplanes?

Are you saying my friend shouldn't do this because they'll figure him out?

The state regularly sends inspectors to airports to gather N numbers of aircraft tied down, and they somehow get the N numbers of hangared airplanes, too. They don’t care where the owner lives; if his plane is frequently here, they’ll send him a bill. There are a fair number of Delaware corporations on the registration, but they get CA tax bills.
 
How? How do they know it's the same person? There's no identifying information except name. Some names are very common. What's to make the state tax guys say that there can't be a John Smith in CA and one in TX who own airplanes?

Are you saying my friend shouldn't do this because they'll figure him out?

If your friend wishes to take his chances fighting a potential tax fraud charge, that's up to him. Not sure it's worth the relatively small annual property tax bill on an RV, but to each his own.
 
If your friend wishes to take his chances fighting a potential tax fraud charge, that's up to him. Not sure it's worth the relatively small annual property tax bill on an RV, but to each his own.

For me personally, it's not worth it for my current plane. I pay almost $800/ year in property/ use tax for my $42k RV4. And paid over $4000 in sales tax when I bought it. But I can see how more expensive plane owners would be motivated to try to avoid taxes in CA.

What about that rule about not having to pay sales tax if you keep your plane out of the state for 6 months from the time you buy it? Something like that... does anyone recall the specifics? That would be very do-able and can potentially save big bucks.
 
Good luck.

California is tenacious about collecting taxes related to aircraft. They?re not new this game. Most builders that attempt avoidance are new to the tax system and will get found out and penalized. There?s no rationalizing or reasoning with the tax man. The rules are pretty one-sided in favor of the state. Let us know how your friend does with his tactics. Best approach is to complete the build in a more tax-friendly state. Texas is one. Even NY removed the tax a year or so ago. But verify for yourself. I actually did stay at a Holiday Inn Express the other nite.
 
California is tenacious about collecting taxes related to aircraft. They’re not new this game. Most builders that attempt avoidance are new to the tax system and will get found out and penalized. There’s no rationalizing or reasoning with the tax man. The rules are pretty one-sided in favor of the state. Let us know how your friend does with his tactics. Best approach is to complete the build in a more tax-friendly state. Texas is one. Even NY removed the tax a year or so ago. But verify for yourself. I actually did stay at a Holiday Inn Express the other nite.

And this friend might want to a) read up on the penalties that could be applied should their too-clever-by-half scheme be disallowed, and b) talk to a competent tax pro with experience in aviation.

E.g.,, "complete the build in a more tax-friendly state." I'm not sure this how this would work...unless you actually have the components delivered to the other state, and do the building in that state, and then finish it there and get the A/W cert there. And even then, IIRC there's a mechanism in place for states to recoup those taxes when you move it back (that's one aspect of the "use" part of use tax, I believe).

All those shenanigans with trying to claim the aircraft is domiciled elsewhere, etc., etc., may make sense for a corporate jet, but I doubt it's very viable for an RV. YMMV.
 
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Utah actually spells out the details of aircraft taxation pretty clearly, I would say they fall on the 'aggressive collection' side of the argument:

https://tax.utah.gov/selfreviews/aircraft/faq.pdf

Interesting that the DMV includes aircraft in their sphere of responsibility.

Tax avoidance is legal, and worth the legwork, to me anyway. And sometimes the bear will even hand you a stick to poke them (the county assessor's office was quite helpful in telling me exactly how not to pay personal property tax for my locally registered but not locally based airplanes).

Tax evasion, not so good.
 
What about that rule about not having to pay sales tax if you keep your plane out of the state for 6 months from the time you buy it? Something like that... does anyone recall the specifics? That would be very do-able and can potentially save big bucks.

In CA it is 12 months. That's a long time. There are ways around the tax that involve flying to other states for a period of time but it's complicated and expensive.

-Marc
 
So the friend has decided not to go this route. Just bite the bullet and pay the taxes if he buys another aircraft. But I would bet that if you're meticulous and do you research ahead of time, that it is totally possible to LEGALLY avoid CA taxes. Again, depends on the value of your aircraft. If you own a $400k Extra, or multi-million dollar business jet, then it'll be worthwhile to figure out your options. If you own a humble little RV4 like me, then it's not worth it. Cheers.
 
Wisconsin is pretty serious about collecting sales tax. We got a letter from them just a couple months after purchasing. That bill sucked. Had we formed a non-profit instead of an LLC for the plane we might have been able to get around it.
 
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But I would bet that if you're meticulous and do you research ahead of time, that it is totally possible to LEGALLY avoid CA taxes. Again, depends on the value of your aircraft.

Yes you can legally avoid the sales/use tax with some work. There are services that advertise to help you do just that.

It may be a little more difficult to avoid the unsecured property tax as most airports are required to advise the tax assessor of aircraft stored in hangars/tie-downs etc. I know pilots that file a request to re-assess their aircraft on a regular basis.

One of the things I wish the EAA and AOPA would do is try to get the tax law changed. It used to be that you only needed to wait 90 days to bring your newly purchased aircraft into the state. Now it's one year!

-Marc
 
Man this thread makes me thankful for living in Delaware! No sales tax on anything, and they haven?t raised the income tax rate in 25 years! (Of course we?ll keep ignoring the day of reckoning coming for the states massive accumulating debt...)
 
Florida is aggressive too

On some previous planes I did not volunteer to pay any sales tax. They hunted me down and threatened a $5000 fine. I just bought an RV 10 out of state and promptly sent them the forms and a check for 7%. Ouch.

Mark
 
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