First Buy and Understanding Taxes

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Joseph Matties

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JayMatt
Like the title says, I'm buying my first airplane and I can't seem to make sense of how the taxes work. I'm in Texas and I'm trying to purchase an out of state aircraft. This is a person to person purchase so I'm not buying from a business.
  • When and where do I pay the taxes on this?
  • How do I figure out what my taxes are going to be?
  • Do I have to pay taxes in the state I bought and the state I live in?
These are my questions and any help would be appreciated. Or if someone has a contact that deals with these issues that would be appreciated also.
 
Texas. For a private sale, you pay the taxes in the state you are basing the aircraft. In Florida, there is a form that is available from the state web site. I expect every state, including Texas will have it online. As long as you do it within a few months of the purchase, you should be OK. Don't fall for the 'Delaware' registration hack. If this was a dealer sale, it would be different.
 
thito01 said:
Texas. For a private sale, you pay the taxes in the state you are basing the aircraft. In Florida, there is a form that is available from the state web site. I expect every state, including Texas will have it online. As long as you do it within a few months of the purchase, you should be OK. Don't fall for the 'Delaware' registration hack. If this was a dealer sale, it would be different.
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I found the Texas Use Tax Return, I believe that's probably what you are talking about. You think I won't have to pay an out of state tax also? According to research, I can claim any out of state tax paid against what I owe Texas. If I pay the 8.25% I owe Texas and then Nebraska comes back and says hey... you owe us 5%, how do I get my money back from Texas?
 
thito01 said:
. In Florida, there is a form that is available from the state web site. I expect every state, including Texas will have it online. As long as you do it within a few months of the purchase, you should be OK
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You'd think... but not IL. Here you have to request the form, and they have to receive payment within 30 days of the purchase or they'll charge a penalty, even if it takes 3 weeks for them to mail you the form. Worst. State. Ever.

Texas has some sort of occasional sale exemption. Iirc if you buy from an individual you don't have to pay use tax. We discussed it here a couple months ago. I'll have to see if I can find it.
 
Jim K said:
You'd think... but not IL. Here you have to request the form, and they have to receive payment within 30 days of the purchase or they'll charge a penalty, even if it takes 3 weeks for them to mail you the form. Worst. State. Ever.

Texas has some sort of occasional sale exemption. Iirc if you buy from an individual you don't have to pay use tax. We discussed it here a couple months ago. I'll have to see if I can find it.
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occasional sale exemption sounds good. Nebraska has a fly away exemption which seems like it covers me from paying their tax since it's immediately leaving the state. Only I'm not sure.
 
For TX and I bought 2 planes while living there, unless the person selling it to you has a TX Sales Tax permit and you are not in the business of buying/selling planes the occasional sale exemption applies. Just fill out the occasional sale form and keep it for your records.

Your assumption is correct no state Tax due, especially if Neb has the flyaway exemption.

Feel free to PM me if you have any questions.
 
Joseph Matties said:
So an occasional sale means I don't have to pay taxes at all? That doesn't seem right... Am I understanding that correctly?
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That was my reaction, too. Seems too good to be true, but all the Texas peeps say it is.

My finders fee is only half the money I saved you :D
 
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Joseph Matties said:
So an occasional sale means I don't have to pay taxes at all? That doesn't seem right... Am I understanding that correctly?
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Literally, the state tells you exactly that in the link @Rushie posted.

Purchase From an Occasional Seller

If you do not have a Texas Sales and Use Tax Permit and are not required to have one, you can buy an aircraft tax free from someone who is not in the business of selling, leasing or renting taxable items or services.

You must get a Form 01-917, Statement of Occasional Sale (PDF), from the aircraft seller.

https://comptroller.texas.gov/forms/01-917.pdf
 
The comptrollers office is also pretty helpful if you call them. My last plane I bought FROM Texas and flew it out of state. From my initial reading it seemed as if I needed the seller to sign that exemption form they talk about on the site. Seller refused to do anything in that regard. So I called the Comptrollers office to really see if I needed to do that and they said no. So Texas didn't care and then I paid the broke government in Illinois what they were owed.

I wanted to make sure to dot my I's and cross my T's since my CPA license is out of Texas. So for all the crap I give people in Texas, there's my dark secret. My license is out of the Lone Star state.
 
thito01 said:
Texas. For a private sale, you pay the taxes in the state you are basing the aircraft. In Florida, there is a form that is available from the state web site. I expect every state, including Texas will have it online. As long as you do it within a few months of the purchase, you should be OK. Don't fall for the 'Delaware' registration hack. If this was a dealer sale, it would be different.
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In Ohio that casual sale is not taxed, IF, the purchase is done in Ohio. If the purchase is done out of state then Ohio gets its sales tax rate minus the sales tax that rate of the state the plane is coming from. So just the difference. The key is the sale is completed in Ohio, not outside and then brought into the state. Just make sure you consider the tax requirements of both states. Where purchased and where you live.

Purchase from a dealer is a different animal.
 
Jim K said:
That was my reaction, too. Seems too good to be true, but all the Texas peeps say it is.
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Georgia has the same thing called the casual sale rule. If you buy the plane from Joe Schmoe and you’re not using it for business then it’s tax free. If you buy it from Airplane Brokers R Us then you pay sales tax.
 
Joseph Matties said:
When and where do I pay the taxes on this?
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Keep in mind that many of Texas' 256 counties also collect annual personal property tax on airplanes. It depends on where your airplane is based, and your mailing address.

When I lived in Jefferson County (Beaumont/Port Arthur) it was about 2% of value, but the value turned out to be highly negotiable. Inquire locally!

Paul
 
If you are buying from Nebraska, the fly away rule should apply to you for Nebraska Sales/Use Tax. The occasional sale rule could apply to the seller. When you take aircraft to Texas you may need to pay Sales/Use Tax to Texas.

You have to look at both states from the buyers perspective. The occasional sale rule is for the seller so they don't have to obtain sales tax permit. Has nothing to do with your obligation to pay use tax.
 
I couldn't get past "understanding taxes". :confused: Glad there are some folks here who could help you.
 
Joseph Matties said:
So an occasional sale means I don't have to pay taxes at all? That doesn't seem right... Am I understanding that correctly?
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That's the way it works ... don't tell the out-of-state pilots, Texas is getting to full with all the transients;)

Jim K said:
That was my reaction, too. Seems too good to be true, but all the Texas peeps say it is. My finders fee is only half the money I saved you :D
Click to expand...

You just have the seller sign the comptroller form:

Purchase From an Occasional Seller
If you do not have a Texas Sales and Use Tax Permit and are not required to have one, you can buy an aircraft tax free from someone who is not in the business of selling, leasing or renting taxable items or services.

You must get a Form 01-917, Statement of Occasional Sale (PDF), from the aircraft seller.
 
Texas does have some strange sales tax rules. In 1997 I bought a boat in Florida and kept it out out of the country for over 5 years. When I brought it into Texas I thought I would have to pay sales tax but there was a loophole that if you had owned the boat over 5 years and brought into Texas you did not have to pay sales tax!
 
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