Property Taxes on Hangar Rentals

BGF_Yankee

BGF_Yankee

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BGF_Yankee
This may be way out of left field, but I'm trying to determine if anyone in the United States pays property tax on hangar space that they rent. Seems like an odd idea to me, but it's one that has popped up nearby recently. I'm not talking about a ground lease to build your own hangar or a hangar that was purchased...I'm talking about month to month rental of a T-hangar space. Anyone??
 
Not here in MI. But the land is owned by the county, not a private party. That's going to vary state to state. We don't even pay property taxes on the building we lease for our business (off airport).
 
I guess I could've also clarified that statement as well. The particular hangars in question are owned by the local Airport Authority, which is a component unit of the local City government. So, not owned by a private party.
 
If it is not in the lease you don't owe it.
I too have heard of it for leases but it sounds like a rarity. Even if it is in a lease it doubt they would collect if it went unpaid by the leasee.
 
Usually the owner of the property & building improvements pays the property taxes, and where I am that's embedded in the landlord's rent charged. Around here there are some hangars that are flat rate monthly rent with no other charges, and a few that are monthly rent plus the tenant pays the utility costs (power & nat gas for heat) directly (the argument being the tenant controls the amount of utility consumption). Never heard of property taxes being separate, but I suppose any sort of lease can be negotiated between two willing parties.
 
I could understand that from a hangar owner standpoint or one that wasn't owned by a governmental entity, especially if it was built into the lease agreement. I can't understand anyone paying a property tax on a hangar that they rent month-to-month when they've put no money other than rent into it. You can't tax a governmental entity, so you go after the people renting the hangar?
 
BGF_Yankee said:
I could understand that from a hangar owner standpoint or one that wasn't owned by a governmental entity, especially if it was built into the lease agreement. I can't understand anyone paying a property tax on a hangar that they rent month-to-month when they've put no money other than rent into it. You can't tax a governmental entity, so you go after the people renting the hangar?
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If you don't pay the property taxes on a hangar you are renting, what is the county going to foreclose on? Your house?
 
True, but possibly affect credit? Just trying to see how it's done other places in the US.
 
I have heard this to be the case in some counties in California.(not in the sense of a triple net on a commercial property but as in payiing property tax on the use of a city owned hangar). Seems bizarre.
 
Not here in AR that I am aware of. I rent from the city and have no rights to the land or structure other than stowage of aviation stuff.

My possession is revokable. If the paid taxes on it, that would confir certain rights under the law.


What they can do is amortize any taxes into the rent, but ultimately, the city\county is the taxable owner.
 
That seems reasonable. Do you know exactly what "rights" that would entail if you were to pay taxes on it? Could you argue some sort of ownership?
 
I'm not a lawyer so I can't say really. But you may have an imminent domain issue if you pay taxes on the property and then have an infringement. By paying taxes, the gov is acknowledging that you have rights to the property.

This would stray into the useage of those rights to the property as well.
 
The only time paying taxes plays a role in 'rights' is in a adverse possession scenario. You farm your dead uncles field, pay taxes on it for 10 years and nobody contends your possession, you may have an adverse possession claim. In the case where the owner gives you license to use the property and you pay a lease, you don't get any rights to the property. I pay property taxes on leased commercial properties, doesn't give me any rights to them beyond those spelled out in the lease.
 
Does the property owner also pay taxes? Not knowing all the tax code possible in these situations, who has actual responsibility for paying the taxes? In general, it's always the owner not the lessee.
 
City owned hangars and the County wants to levy a property tax to the renters because it can't tax the City.
 
You contacted the TN state revenue office about that yet?

What right is the county trying to exert, e.g. what platform are they using to justify the reach?
 
Is it some sort of use tax or sales tax? You pay tax on hotel rooms and rentals cars that you don't own.
 
No. Property tax as issued by the County Tax Assessor's office. Hasn't happened yet, but I think it's in the works. Can't really figure out how you pay taxes on something you don't even own.
 
BGF_Yankee said:
No. Property tax as issued by the County Tax Assessor's office. Hasn't happened yet, but I think it's in the works. Can't really figure out how you pay taxes on something you don't even own.
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When you get it, forward the bill to the city, or put "RTS: Not the owner" on the bill and put it back in the mailbox.
 
Back when I had my hangar on the west coast, owned the hangar, leased the land, no property tax.
 
Yes, I pay property tax on a T-Hangar I rent. The City of Taylor owns the hangar, Williamson County taxes us. I've heard we're in one of two counties in the state of Texas that do this. It's not much, something like $65/year.

The way it was explained to me (when I complained) was it's property the City owns, but I'm the only person who can use it, so since it's not open to the public, I have to pay taxes.
 
Lowflynjack said:
Yes, I pay property tax on a T-Hangar I rent. The City of Taylor owns the hangar, Williamson County taxes us. I've heard we're in one of two counties in the state of Texas that do this. It's not much, something like $65/year.

The way it was explained to me (when I complained) was it's property the City owns, but I'm the only person who can use it, so since it's not open to the public, I have to pay taxes.
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Doesn't pass the smell test.

If you rent a house in TX do you also have to pay property tax?

I mean if it rent a house, I'm the only one who can use it.
 
James331 said:
Doesn't pass the smell test.
If you rent a house in TX do you also have to pay property tax?
I mean if it rent a house, I'm the only one who can use it.
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Yeah, but the City doesn't own the house. They're saying City property should be for everyone, but only I can use this so it's different. If it was a lot of money, it might be worth fighting, but they would just raise the rent.

They will also argue that someone is paying the taxes on the house you're renting. It would be the property owner, but they're paying it from your rent.

They value my hangar at somewhere around $5K I think. I told them if that was the value, I would buy all 36 of them from them. I could pay them off in 5 years with current renters and be in the positive. Their response was to ask if I wanted the to raise the value! I'll pick my battles, this isn't one I want to jump into!
 
Reminds me of when I went to pay my houses ransom, the tax collectors office wouldn't take a credit card, said the couldnt take the processing hit becuse they "don't make any profit on property taxes"

I laughed and said its all profit, you didn't work a minute worth of labor or exchange a single good or currency for it. Ahh overbloated government.
 
I went and pulled out the bill. I was wrong, it's valued at $3180. The bill comes from the the Williamson County tax assessor, and it's $87.30 per year.

The most frustrating part of it is they give you a schedule. If you pay in January it's $87.30, wait until Feb and you owe $93.40, Mar $95.15, etc. To me, this means you don't have to pay in January, you can pay later if you want, it just costs more. I forgot to pay it in January this year and they turned it over to a bill collector!! I was livid. Why give me multiple dates I can pay if what you really mean is it has to be paid in January. Very frustrating...
 
One possible angle might be along the lines of that when a city or a 501c3 rents property, it loses it's tax exempt status for that property.
 
It's called possessory interest tax. The hangar owned by a gov't entity is exempt from tax. But when you convert it to non-gov't use, the tax becomes due.

Public use has nothing to do with it... Government versus non-government makes the diff...

Paul
 
It is a function of state law. Any answer from any state other than the one you are in is not relevant. Within the same state, county assessors may interpret the same law differently even though they make a great effort to be consistant. This issue has been through the court system in Arkansas.
 
They do at Sacramento Exec. Surprised me. Worse part is the hangar sucked so I moved out mid year and they insisted on my paying the full year. Told them to pound sand. Send me a prorated bill for the months I was there and I'd pay it. Got a few "scary letters" as attorneys like to call them and they gave up. Really crappy program. Ought to be in the damned rent.
 
Lowflynjack said:
I went and pulled out the bill. I was wrong, it's valued at $3180. The bill comes from the the Williamson County tax assessor, and it's $87.30 per year.

The most frustrating part of it is they give you a schedule. If you pay in January it's $87.30, wait until Feb and you owe $93.40, Mar $95.15, etc. To me, this means you don't have to pay in January, you can pay later if you want, it just costs more. I forgot to pay it in January this year and they turned it over to a bill collector!! I was livid. Why give me multiple dates I can pay if what you really mean is it has to be paid in January. Very frustrating...
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Those are called "late fees". Its your call.
 
Doggtyred said:
Those are called "late fees". Its your call.
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I think his issue was with the fact that they gave a schedule for delayed payments but turned it over to collections rigght away.

That's an interest rate of 84%, if any non govt entity charged those usurious fees, the pols would be screaming from the rooftops to regulate it away.
 
flyingriki said:
They do at Sacramento Exec. Surprised me. Worse part is the hangar sucked so I moved out mid year and they insisted on my paying the full year. Told them to pound sand. Send me a prorated bill for the months I was there and I'd pay it. Got a few "scary letters" as attorneys like to call them and they gave up. Really crappy program. Ought to be in the damned rent.
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I would be careful with this one. I was trying to figure out how to pay the property tax on my plane and called the county assessor. They had the hangar on the list in my name (City of Lincoln, CA owned), but not my plane (strange). They could potentially file a tax lien, though I am sure you would have been notified.
 
Here in PA, the only time you see a split tax bill is for mobile home parks. Since the trailers are not affixed to the land, the land owner only pays for the land assessment and then the assessors office will issue a separate tax bill to each mobile home owner for the "improvement". I guess if the hanger is not considered affixed to the land and is owned by someone other then the land owner, the same principles could apply, but I've never seen it.
 
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Before this thread, I thought, 'Nah, only property owners can get dinged for property tax'.
It's our common understanding, right?

Now, I am not so sure. I found the code for Texas on the issue and there are quite a few lines in there about possessory interest (which has been noted in a previous post).
Sure, it's thievery by the government, sanctioned by guess who - the government - but I think the law is saying renters can be taxed in Texas. Need lawyer to interpret but I think it is saying they can tax a non-owner if the property's owner is normally exempt from taxation:

Sec. 23.13. TAXABLE LEASEHOLDS. A taxable leasehold or other
possessory interest in real property that is exempt from taxation to
the owner of the estate or interest encumbered by the possessory
interest is appraised at the market value of the leasehold or other
possessory interest. However, the appraised value may not be less
than the total rental paid for the interest for the current tax year.

and

Sec. 25.02. (snipped)
..........
(3) separately taxable estates or interests in real
property, including taxable possessory interests in exempt real
property;

interestingly, Sec. 25.07 specifically discusses:
"...building used primarily for maintenance of aircraft or other aircraft
services, for aircraft equipment storage,"

Bottom line, for me - if it is <$x00, I'm not fighting it.
 
To the OP. Let me guess. You live in TX. The short answer is yes, they can do this legally.

http://www.statutes.legis.state.tx.us/SOTWDocs/TX/htm/TX.25.htm#25.07

And before someone claims a hangar should qualify as an exemption due to "...a building used primarily for ... aircraft equipment storage", let me point out the courts have already ruled that storing an aircraft in your hangar is not the same thing as storing aircraft equipment.

http://tx.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20090417_0003135.TX.htm/qx
 
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