Prices of new and used aircraft are like any other big ticket item in this post-pandemic world, THROUGH THE ROOF! Time-frames for newly built general aviation aircraft are being quoted in years and not months at this point, and the unavailability of new aircraft has bolstered used aircraft prices, the likes of which we have never seen. With the prices of new & used aircraft at historical highs, how can anyone even consider adding 7-11% to the purchase price of their aircraft to cover sales tax in their home state?
A common mistake made by people buying aircraft is that they only worry about their ‘home’ state when it comes to sales tax on aircraft. However, WHERE you purchase your aircraft makes a difference too. There are several states that will allow you to close on your aircraft transaction and then leave that state without paying sales tax, but there are many more states that don’t have a ‘fly-away’ exemption. And even if the state you close in has a fly-away exemption, do you know the requirements to use the exemption in that state? Most states require paperwork signed by the seller and the buyer before they recognize a legitimate fly-away transaction.
There are seven states in the US that DO NOT impose sales tax on general aviation aircraft acquisitions. There are 43 states that DO impose sales or use tax on aircraft that are purchased, transferred or moved to their states, even after years of ownership. All 43 of those sales tax states have legal sales tax exemptions that our aviation tax consultants can utilize to help you reduce or eliminate, the sales tax you must pay otherwise.
The time to plan for the sales tax exemption is BEFORE you sign an agreement to buy an aircraft. Many aircraft sellers will work with you on making sure your aircraft purchase takes place in a friendly ‘fly-away state’, but once you have signed a purchase agreement and placed your deposit, sellers are much less motivated to allow the aircraft to move before you have closed on the purchase.
Don’t make the mistake of trying to manage an aircraft sales tax exemption on your own. Once the exemption is ‘blown’, there is little you can do to correct the error. We have the knowledge and experience to help you navigate through the process of acquiring your new aircraft and avoiding sales tax. Let the professionals at Ascendant Aviation Tax & Accounting advocate for you and help you keep more money in your pocket. Use the “Contact” link at the top of the page to reach out to us for a free consultation.