Airplane Sales Tax

When I bought my first plane four years ago, through a broker in my home state of Illinois, I was able to escape the five-digit state sales tax by registering the plane to my second home, in another state. Now I live in the second home, having sold the first, and am thinking about another airplane. There must be good legal options for minimizing taxes on buying and owning. Is there a book, web site, or other comprehensive source of information about what sales and property taxes the various states charge? Any words of wisdom from personal experience?

I doubt if there's a book that lists the differences between each state. Perhaps in a law school library or bookstore, but that might be a bit expensive. Most sources out there would point you to the Secretary of State or Comptroller for each state in which you're interested. In TX, state sales tax is charged on the purchase of an airplane UNLESS it's an "occasional sale." That means that John Doe sold you his plane, and he's not normally in the aviation sales business. If you buy a kit and build your own, you owe TX sales tax on the kit, regardless of where you bought it, unless the state in which you bought it also charged you tax. No double taxation that is. If you buy stuff out of state, the TX tax is called "use tax" but it's the same thing, at the same rate. I bought a Cessna and didn't have to pay. I bought a kit, and paid.

The Pilot's Guide to Taxes should be a helpful resource for you.

Here is a resource from Conklin and de Decker.

I'm not a Lawyer, and I don't play one on TV. I also did not stay at the Holiday Inn Express last night. But here's my opinion.

If your state charges sales tax on airplanes, there's no way around paying sales Tax ONCE.

Buy the airplane in the mname of an LLC. When you sell the airplane, don't sell the airplane.....sell the LLC (which owns the airplane)..... then the airplane has not really changed owners. - It's still owned by the LLC.

The danger in doing this is if the LLC has any outstanding bills, claims, law suits, or judgements against it, the new owner may be (will probably be) liable.

It all depends on where you choose to live. In NH, the costs are so low that we have refugees from surrounding states registering and parking their airplanes here to avoid taxes. In fact, our neighbor, Mass, gave up charging sales tax on aircraft since it was so easy to avoid by parking in NH.

NH is still welcoming refugees from high tax states. And there is still hangar space available.

Best of luck,

Wes
N78PS