Ad valorem tax?

Loveair

Loveair

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Loveair
Can't believe I didn't do the research on this before my purchase. Ad Valorem tax is 20% in Alabama:yikes:. Does everyone pay this? I didn't finance so I guess I could ignore it awhile. But me thinks that's a bad idea!
 
No clue what it is. Care to tell us?
 
Loveair said:
Can't believe I didn't do the research on this before my purchase. Ad Valorem tax is 20% in Alabama:yikes:. Does everyone pay this? I didn't finance so I guess I could ignore it awhile. But me thinks that's a bad idea!
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I am not sure what you are talking about, but ad valorem tax is basically the same as property tax on a vehicle in Georgia. The state values the boat, airplane etc and you pay tax on a % the value, should be a very small percentage of the purchase price or value of the item. Cars were generally $50-500 dollars depending on the values. You may want to check and make sure it isn't sales tax plus a penalty. :dunno:
 
Yeah ad valorem is a tax on property value. Sales tax is, obviously, a tax on the sale of something.

Unless Alabama classifies airplanes much differently than other property, 20% for ad val seems sky high to me. And ad valorem is paid every year. Holy ****. Are you sure that's the right percentage and are you sure it is ad valorem and not a one-time sales tax?
 
As I read through this
http://revenue.alabama.gov/advalorem/sections/personalproperty.cfm

I think they mean they're going to asses a tax based on 20% of the aircrafts book value.

Eg your airplane is worth 100,000 so 20% of that is 20,000. Then they charge whatever their tax rate is... say 5% so 5% of 20k = $1,000 tax.


Call them. No way they're charging you 20%. Nobody in Alabama would own an airplane if that was the case.
 
OK! I think you are right COWMAN. Thank goodness! I re-read it and that seems correct!
 
Loveair said:
Can't believe I didn't do the research on this before my purchase. Ad Valorem tax is 20% in Alabama:yikes:. Does everyone pay this? I didn't finance so I guess I could ignore it awhile. But me thinks that's a bad idea!
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I pay ,
because the Tax Revenue Dept. was kind enough to seek me out and notify me of my property tax obligation.
To be sure , do not fail to purchase from an individual in a casual sale, otherwise sales tax is due.
PM me and I will tell you what I pay in my county.:yikes:
I think specifically you don't want to upgrade avionics without expecting a higher tax liability.

"Business personal property is considered Class II property and is taxed at 20% of market value."


Don't ask too many questions follow their lead I had two counties claiming my liability! One in which I reside one in which the aircraft is based.
 
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Sleepingsquirrel said:
I pay ,
because the Tax Revenue Dept. was kind enough to seek me out and notify me of my property tax obligation.
To be sure , do not fail to purchase from an individual in a casual sale, otherwise sales tax is due.
PM me and I will tell you what I pay in my county.:yikes:
I think specifically you don't want to upgrade avionics without expecting a higher tax liability.

"Business personal property is considered Class II property and is taxed at 20% of market value."


Don't ask too many questions follow their lead I had two counties claiming my liability! One in which I reside one in which the aircraft is based.
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Since avionics upgrades have nearly no effect on market value, I don't see how your initial thought holds true.:dunno:
 
Henning said:
Since avionics upgrades have nearly no effect on market value, I don't see how your initial thought holds true.:dunno:
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It is on their form.
When avionics upgrades can sometimes reach hull value of older airplanes I suspect they placed these questions to maximize revenue.
What do I know?
Just trying to help the OP not be unaware until he gets his head around the tax system here.
 
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Sleepingsquirrel said:
It is on their form.
When avionics upgrades can sometimes reach hull value of older airplanes I suspect they placed these questions to maximize revenue.
What do I know?
Just trying to help the OP not be unaware until he gets his head around the tax system here.
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So are they figuring "panel tax" at 20% the installed upgrade price, upgrade equipment price, or what?
 
It is property ,just like the list of household items including refrigerators in the tax code.
 
They have it in Georgia, too. Some people avoided it for years, but once the FAA instituted the re-registration process, the counties were able to find all the airplanes they had overlooked.
 
Sleepingsquirrel said:
To be sure , do not fail to purchase from an individual in a casual sale, otherwise sales tax is due.
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I can't speak for other states, but in Georgia, the "casual sale" thing doesn't exist. You have to pay sales tax on the purchase and ad valorem tax annually no matter what.
 
write-stuff said:
I can't speak for other states, but in Georgia, the "casual sale" thing doesn't exist. You have to pay sales tax on the purchase and ad valorem tax annually no matter what.
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Airplanes are still exempt from sales tax if it's a casual sale, cars are different, they have a TAVT fee that is 6.75% of the VALUE of the vehicle that is due upon registration and gives you an exemption from ad valorem for the ownership life of the vehicle. Airplanes and boats are still subject to sales tax if purchased from a dealer or any type of company and they will owe yearly ad valorem taxes.
It's good for people who buy new or late model cars from dealers, it sucks for people who try to buy and sell them as they have to pay the TAVT tax when they buy them.
 
write-stuff said:
I can't speak for other states, but in Georgia, the "casual sale" thing doesn't exist. You have to pay sales tax on the purchase and ad valorem tax annually no matter what.
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I also got the letter asking me to list the ownership of the aircraft I had purchased. Had either of them been a dealer or broker sales tax would have been due but neither of the sellers was. So casual sale is allowed. I remember the form they sent me specifically asked for the Bill of Sale, NOT the FAA Bill of Sale. I was concerned because my transactions were done with the FAA Bill of Sale ! The lady I talked to on the phone was aghast that I would transfer funds and property with only the FAA form. I supplied copies of what I had and it was determined that the sales were not taxable.
 
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I had a moment like this when I bought my first aircraft. I searched all over for something about sales tax when purchasing an aircraft in Tennessee. Nothing, so I went forward with the purchase not giving it a second thought. I found out about 2 months later that Tennessee has a Use Tax for aircraft. I immediately called the department of revenue and luckily got a friendly woman who helped me out. I sent a check out that day and patiently waited for them to deposit it...then kept a copy of the check showing that they had done so in the event they tried to come back on me. It happens...just roll with it and do what you're supposed to.
 
Henning said:
So are they figuring "panel tax" at 20% the installed upgrade price, upgrade equipment price, or what?
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I did find this in the link in Cowman's post.

"Tangible personal property includes material items such as machinery and equipment, tools, furniture and fixtures among numerous other items. Tangible personal property is taxable to businesses for Alabama property tax purposes. Aircraft and avionics equipment is taxable for business personal property in the State of Alabama, as well as, motor vehicle “add-on” equipment. The values published by the Department of Revenue in the Alabama Uniform Motor Vehicle Assessment Schedule for Ad Valorem Taxes represent market value of motor vehicle cab and chassis only and do not include equipment and/or bodies added after a vehicle leaves the manufacturer. The “add-on” equipment and/or bodies are components, which give the vehicle added value and they are taxed as business personal property."
 
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Based on a really quick read, it looks like the Ad Valorem tax is only assessed on business personal property, and not private personal property. Unless you own the plane through a business entity, you may want to check with your tax guy/gal if it applies to you in the first place...
 
I think I did that and was pleased to let the tax office lead me through the less painful aspect of business personal property than a far more expensive claim of something else.
Many people suggested that I file for an LLC. I think I know why they suggested that.
Really I think all I had to do was claim business/pleasure on some form for it to be legitimized as business personal property. see (3)(a)


" 810-4-1-.09 Valuation of Aircraft.
(1) PURPOSE - This rule is issued pursuant to the authority contained in
Section 40-7-64, Code of Alabama 1975, for the purpose of establishing guidelines and
procedures for the valuation of aircraft, except public utility aircraft and commercial air
carriers, for ad valorem tax purposes.
(2) PROCEDURES - To ensure the equitable taxation of aircraft in the State
of Alabama, the following procedures shall be used for valuing aircraft as of October 1
of each tax year.
(a) The Property Tax Division shall provide annual aircraft valuation guides to
county tax assessing officials charged with the duty of assessing aircraft.
(b) Each county official charged with the duty of assessing aircraft shall use
the valuation guides provided by the department each year in the appraisal of aircraft for
the purpose of assessing aircraft for ad valorem taxation.
(3) GUIDELINES FOR THE ASSESSMENT OF AIRCRAFT SHALL BE:
(a) All aircraft are assessed as Class II property (20% of market value).
(b) The retail value in the valuation guide provided by the Department of
Revenue shall be the basis for determining the market value of the aircraft. The market
value shall be 89% of the retail value of the aircraft, adjusted for condition, avionics,
etc., to arrive at a fair market value.
(c) The purchase price, plus any additional cost for rebuilding or modifications
after purchase, Aircraft Blue Book, Trade-A-Plane, other nationally recognized
publications or area comparables may be used as a basis of assessed value when a
value is not provided in the valuation guide. The assessed value will be determined by
taking 20% of the total cost. However, the assessed value shall not go below the $500
minimum assessed value for aircraft.
(d) Airplanes used exclusively for the purpose of crop dusting are exempt
from ad valorem tax. A taxpayer should claim the exemption at the time the property is
assessed.
(e) Aircraft are to be assessed in the county in which the aircraft is generally
based, departs from, and returns to in its normal operation. The tax lien attaches to all
aircraft with situs in the state on October 1 for collection one year later. If an aircraft is
not physically in the state on October 1, this does not mean the aircraft is not taxable for
the entire year. If the aircraft is normally kept in the state, even though it may have
been out of the state on October 1, it would be taxable. "
 
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N747JB said:
ad valorem tax is basically the same as property tax on a vehicle in Georgia.
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I'm looking to purchase something soon. Any idea on what the AV rate is for an airplane in Georgia? (Specifically DeKalb County)

What about sales tax if purchasing from a dealer in Florida?
 
James_Dean said:
Iowa has a 6% use tax. It sucks.
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Mine equated to about 8% where I'm at in Tennessee...I have to keep telling myself I'm happier to pay a one time tax for a long term investment rather than a yearly registration fee like some states do.
 
I heard that another state with hideous taxation is Minnesota. It's a big reason why Part 103 ultralights are so popular there.
 
Flocker said:
I'm looking to purchase something soon. Any idea on what the AV rate is for an airplane in Georgia? (Specifically DeKalb County)



What about sales tax if purchasing from a dealer in Florida?
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Florida is 6-7% depending on the county, the good news is that aircraft maintenance is tax free, so buy low, upgrade, and sell high! BTW, it's only for residents, if you moving it out of state within 90 days, it's tax free.
 
Flocker said:
I'm looking to purchase something soon. Any idea on what the AV rate is for an airplane in Georgia? (Specifically DeKalb County)

What about sales tax if purchasing from a dealer in Florida?
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If you buy from a dealer or any company or LLC you would owe Georgia sales tax based on your county, which is either 6-7%. If it's a brokered airplane and you can buy directly from the owner, it may be considered a casual sale, just make sure you are buying it from an individual.:D
Not sure on the AV tax, you could call the county where you will be basing it and ask, I bet they could get you a pretty close estimate.
 
teejayevans said:
Florida is 6-7% depending on the county, the good news is that aircraft maintenance is tax free, so buy low, upgrade, and sell high! BTW, it's only for residents, if you moving it out of state within 90 days, it's tax free.
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Until you get it to Georgia. ;)
 
Yeah, I just talked to a bunch of guys in Georgia...they are less than thrilled with the current state of tax laws down there. Note to self, won't be moving there anytime in the near future. I love Tennessee actually. The use tax on the plane wasn't terrible because I planned for it the second time around, but what I really love is paying $24 a year for any road vehicle that I have :D
 
Loveair said:
Hope you're right! Thanks!
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I just phoned the Alabama office of revenue. Looks like it will be around 6 cents times 20% of the value of your airplane as determined by VRef.
 
As a follow up for the Georgia pilots, here are the current tax rates for three different counties in and around the Metro Atlanta area:

Cobb County (KRYY) 0.02946 on 40% of the FMV
Gwinnett County (KLZU) 0.03575 on 40% of the FMV
DeKalb County (KPDK) 0.04475 on 40% of the FMV

Note: All taxes are due by 4/1 each year.
 
Flocker said:
As a follow up for the Georgia pilots, here are the current tax rates for three different counties in and around the Metro Atlanta area:

Cobb County (KRYY) 0.02946 on 40% of the FMV
Gwinnett County (KLZU) 0.03575 on 40% of the FMV
DeKalb County (KPDK) 0.04475 on 40% of the FMV

Note: All taxes are due by 4/1 each year.
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60% of the time you get taxed every time?

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I don't get that. Is that 0.02946 multiplied times 40% of the FMV? If so, why not just write the product or 1.1784%??

Perhaps a lawyer can explain :dunno:
 
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petrolero said:
I don't get that. Is that 0.02946 multiplied times 40% of the FMV? If so, why not just write the product or 1.1784%??

Perhaps a lawyer can explain :dunno:
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Coincidentally I am a lawyer, but claim no special expertise in tax. Property taxes are calculated a similar way where I now live and where I moved from. What I do know is that calculating it that way rather than simplifying the factors does two things: It lets the taxing jurisdiction better hide the amount of the tax, and particularly changes over time, and obfuscate about it. "See, we're not raising taxes, its still on 40% of value, like always." Property owners get a postcard in the mail with their valuations, and a hypothetical tax bill if the prior year's rate holds. Then after the period to grieve your valuation is closed, they announce the new tax rate (coincidentally higher). Property owners have no outlet to grieve until the following year, by which time average people with lives and TV habits have forgotten.

Why on 40% and not all of the value? Some people think they are getting a deal and that makes the tax bill land softer. It also thwarts attempts at disputing the value -- if you are successful at getting 5% knocked off your assessment, you only knock 2% off your tax bill. People are less inclined to try, and the assessor's office has to defend fewer challenges.
 
Is this valorem tax the same thing as usage tax?
 
Anybody know what New York state does for an out-of-state casual (person-to-person) purchase?
 
James331 said:
Is this valorem tax the same thing as usage tax?
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It's basically a personal property tax, not related to sales or use tax, it's an annual tax based on fair market value. ;) It applies to boats, airplanes, tractors etc as a separate tax bill. For autos it is added to the annual tag cost unless you bought the vehicle after January 2012, I think that's the proper date. Then it's paid as a "title tax/fee" and you don't owe it again. :yes:
In Georgia, use tax is another way of collecting sales tax that isn't paid at purchase.
 
James331 said:
Is this valorem tax the same thing as usage tax?
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No, it's property tax. Like the property tax on real estate. Tends to be more common in southern states (e.g. no AV tax in Maryland, but taxed in Virginia). There is also ad valorem tax on cars and other specified personal property.
 
Though it has many faults, for what it's worth, there is no sales or use tax in Oregon. Edit: Also, no ad valorem tax on privately owned aircraft, if I understand the Oregon statutes.
 
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