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GA Taxes on purchase - "casual sale" exeption

walkman

Well Known Member
I realize nothing read or written here should be considered or taken as professional advice, but does GA have an exemption for casual sales (person to person, not dealers) for aircraft? Am I responsible for sales and use tax on an aircraft in GA?

Also, where an LLC is used to own the aircraft for liability reasons does that void the exemption?
 
Varies by state but typically there is a sales tax and a parallel use tax. That is, if the sale transaction doesn't trigger the tax, the use of the item does.

There is typically a tax obligation in a sale of tangible property between individuals. The way it usually works is that when the sale is completed, you visit the office of the taxing authority to report it by filling out a form and paying the tax.

The exemption that sometimes exists for a LLC (etc.) is when an individual contributes property (on which the tax has been paid) to the LLC as their investment. That transaction, between the individual as an owner and the same person as a member of the LLC, is usually not taxable. (There is often a recapture provision and a required holding period to prevent the obvious.)

States have become pretty savvy about sales taxes. To do nothing invites the ultimate assessment along with interest and penalties.

YMMV - good luck.

Dan
 
Be careful...

There are a lot of "unfriendly" tax States out there.

If you close in some states you could be responsible for "sales" tax in the state you close and then "use" tax in the state you base your aircraft in.

You "may" be elgible for a 1031 like kind exchange if buying and selling "like" equipment.

You "may" be able to get an exemtion from another state "if"
You do business in that state. Then you probably won't have to pay tax in that state and be able to fly the airplane home to pay the use tax.

Normally buyers try to close in a tax friendly state like CT, OR, DE, ( others) then fly home.

You should consult an aviation tax attorney if in doubt.

Remember back last year or so i think it was Maine or Florida where "if" you landed there within 6 months of buying an airplane that state charged you full sales or use type tax on the value!
 
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Taxes...

Walkman

When I bought my RV, it was an "individual to individual sale". At the time I understood that there would be NO sales tax on the purchase. This was only partly true. As it turns out, if you purchase an aircraft from an individual and not a "dealer" AND THE SELLER AND BUYER BOTH RESIDE IN THE STATE OF GEORGIA, then there is no sales tax. If the seller is from another state other than Georgia - regardless if its an "individual to individual" or "dealer to individual" sale, there will be sales tax on the purchase amount. The tax percentage will be detirmined by what county you reside in. And since I purchased the plane outside the state of GA I got hit with a surprise tax bill 4 months after I bought the plane. In my case it was 7% of the purchase price. Not a bill I was expecting!! :eek:

Also, you will be responisble for a "ad valorem" tax on the airplane every year.
My experience has been that the state will mail you a form asking all sorts of questions about the plane - condition, est value... - for you to fill out and return it to the state. You should recieve a bill in the mail later for the tax amount.

As far as your LLC question - I can'y help there, mine are registered to an individual.

If you're going the LLC route - do look into registering in DE. Many people & companies do this for tax purposes (benifits). Do consult an aviation attorney for help with that though.

Usual disclaimer - just my experience. I delt with this in 2008. The rules may have changed by now. YMMV... :)

Hope that helps!

Daniel
 
Walkman

I live in GA and have purchased two aircraft from individuals in the last few years. One lived in GA and the other in FL. Both sales were treated as casual sales by the state and no sales tax was paid. The last one took place in Oct 2011 and the lady at the tax office was very pleasant to deal with. Call me if you want more details and a copy of the letter I sent them. 770-639-6900. One key item is it must be an individual. The state considers a business or LLC that owns more that one aircraft to be a dealer. I once sold a Kingair that was owned by an LLc that also owned a second aircraft. The buyers attorney missed that point. He called me in a panic a few months later when he received a $65,000 sales tax bill.
 
Walkman

I live in GA and have purchased two aircraft from individuals in the last few years. One lived in GA and the other in FL. Both sales were treated as casual sales by the state and no sales tax was paid. The last one took place in Oct 2011 and the lady at the tax office was very pleasant to deal with. Call me if you want more details and a copy of the letter I sent them. 770-639-6900. One key item is it must be an individual. The state considers a business or LLC that owns more that one aircraft to be a dealer. I once sold a Kingair that was owned by an LLc that also owned a second aircraft. The buyers attorney missed that point. He called me in a panic a few months later when he received a $65,000 sales tax bill.

Sorry for the necro-posting and raising this thread from the dead (I found it doing a Google search on casual sale for GA), but I just wanted to clarify this. I live in GA and am looking to buy my first plane. So I need to make sure I buy my plane from an individual and not a dealer, correct? And if I do that no sales OR use tax?
 
Don't pick up legal advice in a police station or on the internet.

A tax law question this important should be directed to a tax attorney or CPA who is hired to advise you. WAGs from well meaning folks who do not actually know the answer are a recipe for disaster (or a nasty tax bill). I would look for a CPA who is competent with sales/use tax issues.
 
A tax law question this important should be directed to a tax attorney or CPA who is hired to advise you. WAGs from well meaning folks who do not actually know the answer are a recipe for disaster (or a nasty tax bill). I would look for a CPA who is competent with sales/use tax issues.

In addition to this, The advice you seek must be pertinent to the State in question. Each State is different and independent from others. (PA waives the sales tax on equipment/maintenance items.)

In requesting advice, include your concerns about LLCs and their effect/legalities on sales/use tax.
 
Old thread, but Georgia related...

I paid sales tax on the RV-10 today. Sales tax is not charged in Georgia on casual sales (like the wing and tail kit I purchased second hand). Tax is charged on the kits purchased from Van's and on purchases from other out of state commercial vendors, but it is on somewhat of an honor system for the builder to tally up or provide the receipts. Today's exercise was made a bit easier for me by the fact that the office which collects sales tax on these purchases in North Georgia is located in Cartersville, GA, where I work, so I set up an appointment and visited "the man" in his office to discuss and pay the tax.

One of the interesting things is that my airplane is currently located in Cobb County (in my garage), but will be based in Bartow County. Cobb has 6% sales tax. Bartow has 7% sales tax.

Since I paid the tax while the airplane is still at my house, that saved me 1%. That's a few months of hangar rent for the -10...
 
Additionally, in GA, your annual property tax bill will be based on where u reside, even tho the plane is in another county.

See 12 & 13 below
 
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Kyle - I think u are right. I was thinking of my situation where I live in the city but my plane is in the county. Thought I might escape paying property tax to the city but the DOR specifies that tax still applies and it goes to the city of residence. My residence and hangar are both in the same county. Sorry for the misinformation.
 
I purchased my plane in December 2018 from an individual in California and flew it to my home airport in Georgia immediately. Checked with a tax attorney and was advised that as long as I took possession and immediately flew it out of California, no CA tax would be required, unless I flew the plane back into CA within a 12 month period. Was also advised that there would be no sales tax due in Georgia. Confirmed no sales tax with my local county tax assessor (Putnam County). Both my home and airplane are based at 32GA in Putnam County. So far, I've gotten the personal property tax assessment back for the plane (assessed value is my purchase price, surprise, surprise) for the personal property tax bill that will come at the end of the year and be due in Jan 2020. I have received no sales tax bill.
 
Sales Tax

Based on info I received 14 years ago when I bought my RV7 in Wa, I formed an LLC to hold ownership. The registration and title are in the name of the LLC.
The story was that if the airplane needs to find a new owner, the LLC gets sold but the paperwork on the airplane itself stays the same.

Rules may have changed in the meantime, we shall see, one day hopefully way in the future.....
 
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