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  #1  
Old 01-06-2012, 05:53 PM
walkman's Avatar
walkman walkman is offline
 
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Location: Atlanta
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Default GA Taxes on purchase - "casual sale" exeption

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?
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  #2  
Old 01-06-2012, 06:09 PM
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DanBaier DanBaier is offline
 
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Location: Rochester NY
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Default

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
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  #3  
Old 01-06-2012, 06:21 PM
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SmilingJack SmilingJack is offline
 
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Default 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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Last edited by SmilingJack : 01-06-2012 at 06:32 PM.
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  #4  
Old 01-06-2012, 08:32 PM
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LifeisGood LifeisGood is offline
 
Join Date: Jul 2009
Location: Loganville, Georgia
Posts: 54
Default 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!!

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
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  #5  
Old 01-06-2012, 10:22 PM
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tturner tturner is offline
 
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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.
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  #6  
Old 01-07-2012, 09:31 AM
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walkman walkman is offline
 
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Thanks everyone for the replies.
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