Sales Tax on Purchase

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Mo Speed

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Mo Speed
There are some threads on taxes, but not with my specific question: I'm a resident of Georgia, but if I buy an airplane from an individual in SC, am I to understand that I won't have to pay sales taxes in either state? Just annual personal property taxes in Georgia based on the county millage rate? I'm basing this on the fact that "casual sales" in Georgia are exempt from sales tax...

"A casual sale is defined as a sale in which the tangible personal property involved was not acquired or held by the seller for use in the operation of his business or for resale. Thus, the direct purchase of an aircraft from an individual who used the airplane for personal purposes should not be subject to sales tax."

Is this correct?
 
That may be for Georgia - have you dug into what SC will do?
 
First start with the law in South Carolina. Then see if Georgia supercedes it.
 
There exists the remote possibility that South Carolina will try to get sales tax from you if money and Bill of Sale are exchanged in that state. My research shows it is not a fly away state, but they do limit sales tax to $500 on aircraft sales. My experience is that they won't come after you (I have done multiple fly / drive away vehicle sales from individuals in a notoriously tax stingy state and they have never come after me).

If the plane is located to Georgia before the exchange happens, you are for sure free and clear given Georgia's casual sale rule.

I got my Tax Law Degree from Bazooka Joe U, so YMMV.

PS Welcome. Whatcha' buyin' for mo' speed?
 
I went through this few months ago! (albeit between different states) but let me share my experience and how to go about it.
so, many states have a fly away rule. so while even the state has a sales tax, if you take the plane away within X number of days/period there is no sales tax implications in that state.

- your local state where you base the plane *may* impose a (sales) tax.
- also, where you'd base the plane may have excise taxes for luxury goods, that still may be (periodically) due.
- if you pay sales taxes in a state of purchase of say $100, and your local state charges you $150, you would get credit for the $100 in the purchase state.

the aopa has a great online reference material for this situation:
https://www.aopa.org/advocacy/state-advocacy/georgia
also if you are a member they can give some guidance there as well if you call them up.

for your case it looks like that:
- SC has no fly away rule and has a $300 capped sales tax on aircraft sales.
- GA has no registration fees, but does have property taxes
- GA has limited yard sale rules (applicable if you buy in GA and go)
- GA will credit for taxes paid elsewhere

so what it looks like from this is that you'd be paying $300 sales tax in SC, no sales tax or registration fees in GA but property taxes of 40% of market value.

there is always the option that if the seller state has sales tax, to agree on a location where there is either a fly away rule or no sales tax to do the transaction in that state. that way you only deal with the new home state taxes and that only.
I would advice in that case to have "proof" of the transaction in that state by having a hotel bill, a fuel up of the plane in that state where the transaction happened and basically being able to substantiate that teh transaction did occur there.

not that it is applicable to you here, but whatever you do, never take possession of a plane in CA which is tax hell.
 
"If the plane is located to Georgia before the exchange happens, you are for sure free and clear given Georgia's casual sale rule."


Being in Georgia for the sale is an excellent strategy and point.
But, I'll also check "casual sales" in SC. I'm looking at a Mooney 262 (has the Trophy conversion from M20K 231)
 
"(36) tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, or to an agent or donee of the buyer, at a point outside this State or to deliver it to a carrier or to the mails for transportation to the buyer, or to an agent or donee of the buyer, at a point outside this State;"
SC Code 12-36-2120

Looks like as long as they deliver to you in GA, there's no tax obligation.
 
xander75 said:
I went through this few months ago! (albeit between different states) but let me share my experience and how to go about it.
so, many states have a fly away rule. so while even the state has a sales tax, if you take the plane away within X number of days/period there is no sales tax implications in that state.

- your local state where you base the plane *may* impose a (sales) tax.
- also, where you'd base the plane may have excise taxes for luxury goods, that still may be (periodically) due.
- if you pay sales taxes in a state of purchase of say $100, and your local state charges you $150, you would get credit for the $100 in the purchase state.

the aopa has a great online reference material for this situation:
https://www.aopa.org/advocacy/state-advocacy/georgia
also if you are a member they can give some guidance there as well if you call them up.

for your case it looks like that:
- SC has no fly away rule and has a $300 capped sales tax on aircraft sales.
- GA has no registration fees, but does have property taxes
- GA has limited yard sale rules (applicable if you buy in GA and go)
- GA will credit for taxes paid elsewhere

so what it looks like from this is that you'd be paying $300 sales tax in SC, no sales tax or registration fees in GA but property taxes of 40% of market value.

there is always the option that if the seller state has sales tax, to agree on a location where there is either a fly away rule or no sales tax to do the transaction in that state. that way you only deal with the new home state taxes and that only.
I would advice in that case to have "proof" of the transaction in that state by having a hotel bill, a fuel up of the plane in that state where the transaction happened and basically being able to substantiate that teh transaction did occur there.

not that it is applicable to you here, but whatever you do, never take possession of a plane in CA which is tax hell.
Click to expand...
I was thinking of buying a plane out west and flying home to NC - sounds like CA may not be the place to buy? You've dealt
with this in CA?
 
Sundancer said:
I was thinking of buying a plane out west and flying home to NC - sounds like CA may not be the place to buy? You've dealt
with this in CA?
Click to expand...

CA does have a fly away rule, but you need to fill out some paperwork. note that with all this sales tax stuff, the seller is responsible for collecting the tax and paying the local authorities. now lets say the seller doesnt collect, and something goes wrong, where is the dough coming from... its just too much hassle for me...
one approach is to ask the CA seller to move the plane to a guaranteed and easy to deal with state, make the transaction there and done and over with if that can be done.
aside from that, moving the plane from CA to NC is about a 3-4 trip and you'll have to fly pretty high over the rockies or down south. some of these altitudes to stay above terrain are easily 10k (think about the plane performance, duration of flight, landing possibilities, fuel cost etc). buying a plane is stressful enough if you can eliminate some factors (thinking the IAMSAFE), I would do it.
if you decide that this is your plane, i would recommend to make the flight together with a CFI or a fellow pilot to do that cross country.

on the upside the jet stream tends to give you a little push from west to east :)
 
xander75 said:
, no sales tax or registration fees in GA but property taxes of 40% of market value.
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Wait - If I buy a plane and live in Gerogia, I have to pay 40% of the value in tax? If I buy a $150k plane, I pay that state of GA $60k?
 
WDD said:
Wait - If I buy a plane and live in Gerogia, I have to pay 40% of the value in tax? If I buy a $150k plane, I pay that state of GA $60k?
Click to expand...

They tax you every year for it based on 40% of the value. I think in like 20 years you've bought the plane again in taxes.
 
EdFred said:
They tax you every year for it based on 40% of the value. I think in like 20 years you've bought the plane again in taxes.
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OK. The tax isn’t 40%. It’s some rate applied to 40% of value. That makes more sense.

BTW. - I think different counties may even have their own taxes- Bless their heart.
 
So please educate me on airplane taxation, sooner or later I may buy one, hopefully this year... What would be the best state(s) to actually buy a plane? And what if you live in a place like Georgia but the plane is held in a company incorporated in a different state?
 
Sifossifoco said:
So please educate me on airplane taxation, sooner or later I may buy one, hopefully this year... What would be the best state(s) to actually buy a plane? And what if you live in a place like Georgia but the plane is held in a company incorporated in a different state?
Click to expand...
Where do you live? You can buy from a fly away state all you want but if you live in a state that makes you pay up, it won't matter where you buy from.
 
Sifossifoco said:
So please educate me on airplane taxation, sooner or later I may buy one, hopefully this year... What would be the best state(s) to actually buy a plane? And what if you live in a place like Georgia but the plane is held in a company incorporated in a different state?
Click to expand...

If you're gonna keep it in GA. Airport is going to tell the state all the based planes to the state. You'll get a bill.

Looks like a $100,000 aircraft will be taxed at about $1000 a year in GA.
25 mills * 40% of value.
 
WDD said:
OK. The tax isn’t 40%. It’s some rate applied to 40% of value. That makes more sense.

BTW. - I think different counties may even have their own taxes- Bless their heart.
Click to expand...

just to make sure, georgia does apply property taxes like a house or a car, and it is the *assessed value* times 40% times the mileage rate.
that is, if the plane is based on a GA airport.

to buy a plane, if the plane is not manufactured in GA, the fly away rule doesnt apply and you'd face 4% state tax on the sale price and an additional local tax (depending on county/town etc).
 
I just thought of a fee structure I could charge to professionally answer these questions on POA. I'll take 10% of the sales tax you would've paid had you blindly sent a check to your state and didn't have to. Or I'll take half of the penalties and interest you would incur had you tried to hide it but owed all along. I'd probably do ok with that structure.
 
NealRomeoGolf said:
Where do you live? You can buy from a fly away state all you want but if you live in a state that makes you pay up, it won't matter where you buy from.
Click to expand...

buying:
close the deal in a state that has a fly away rule. that means that even if the plane is based in state X that doesnt have fly away and imposes sales tax (eg GA), BUT you are closing the transaction in a state WITH a fly away rule (sales tax or not) (eg FL), you'd save the sales tax in both states (GA/FL). BUT you may be subject to property or sales tax in the state where you base it.

housing:
ideally base your plane in a state that doesnt exercise sales tax or property taxes for luxury goods.
GA applies both sales tax, state and local, and a property tax as an owner.

note that the state of where the plane will be based would still apply sales tax if applicable. (eg the same if you buy a car in NH and you live in MA, you'd still end up paying MA sales tax!)
if both the selling state AND the state where the plane is based both have a sales tax, the new state of where the plane is based would give credit for the sales taxes already paid.
 
NealRomeoGolf said:
I just thought of a fee structure I could charge to professionally answer these questions on POA. I'll take 10% of the sales tax you would've paid had you blindly sent a check to your state and didn't have to. Or I'll take half of the penalties and interest you would incur had you tried to hide it but owed all along. I'd probably do ok with that structure.
Click to expand...

man... inflation seems to hit on POA also :) would join your gig though if you can materialize it :) but hey one time you share your experience the other time you benefit from the guidance of others, right?! :)
 
xander75 said:
buying:
close the deal in a state that has a fly away rule. that means that even if the plane is based in state X that doesnt have fly away and imposes sales tax (eg GA), BUT you are closing the transaction in a state WITH a fly away rule (sales tax or not) (eg FL), you'd save the sales tax in both states (GA/FL). BUT you may be subject to property or sales tax in the state where you base it.
Click to expand...

I was going to say wrong but then you got it at the end. You could always be subject to sales tax in your home base state depending on the rules there.
 
NealRomeoGolf said:
I was going to say wrong but then you got it at the end. You could always be subject to sales tax in your home base state depending on the rules there.
Click to expand...
yeah sometimes I take a second to get to the point haha :)
even if the state of plane base has sales tax, this approach at least saves the hassle of dealing with 2 authorities and you'd only have to handle the case in your base state. dollar for dollar it doesnt save you anything in that case, just the paperwork overhead (so it saves a few (grey) hairs! ) :)
 
I do wonder why people create a Florida LLC as the home state where the airplane is registered, but plane is based in Georgia.

Maybe asset protection.
 
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NealRomeoGolf said:
Where do you live? You can buy from a fly away state all you want but if you live in a state that makes you pay up, it won't matter where you buy from.
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Well, my personal situation is kind of complicated... I am a resident of the Cayman Islands, but I come to the US often. The plane should be based in the US, ideally in Florida. Purely for asset protection I may hold it in a LLC, and I am assuming the location of the LLC is irrelevant in terms of taxes, that may be levied based on the actual location of the plane. Am I correct saying that Florida charges a 6% use tax? And is it right that if the airplane is moved to Florida after more than six months from the sale, there is no use tax?(https://www.floridasalestax.com/flo...rida-airplane-florida-use-tax-considerations/)
Sorry, but this is really making my head spin!
 
Sifossifoco said:
is it right that if the airplane is moved to Florida after more than six months from the sale, there is no use tax?
Click to expand...

I would say no.

"Any aircraft imported from a foreign country to Florida for use, distribution, or storage into Florida is subject to Florida’s use tax and surtax."
 
NealRomeoGolf said:
I would say no.

"Any aircraft imported from a foreign country to Florida for use, distribution, or storage into Florida is subject to Florida’s use tax and surtax."
Click to expand...
But the aircraft would be bought in the US, not imported. Just moved from a different state
 
Lots of nonsense in this thread. The question you seek is whether Georgia will impose use tax.
 
BTW, some states (NC for sure) require airport/marinas to report long term resident planes/boats. PA gets data from federal databases. They’ll come after you to get their taxes….AND penalties (~10%) if not paid promptly (usually 30-90 days).
LLCs are for liability protection if you are in a partnership, don’t do anything if individual owner and also can provide limited privacy (although renting a PO Box would be cheaper).
 
WDD said:
Wait - If I buy a plane and live in Gerogia, I have to pay 40% of the value in tax? If I buy a $150k plane, I pay that state of GA $60k?
Click to expand...
You pay ad valorem tax based on 40% of the value times the county rate, basically a property tax for non-real estate assets. Typically a $100,000 plane would be $3-700 per year, depending on the county it’s based in.
 
Sifossifoco said:
Well, my personal situation is kind of complicated... I am a resident of the Cayman Islands, but I come to the US often. The plane should be based in the US, ideally in Florida. Purely for asset protection I may hold it in a LLC, and I am assuming the location of the LLC is irrelevant in terms of taxes, that may be levied based on the actual location of the plane. Am I correct saying that Florida charges a 6% use tax? And is it right that if the airplane is moved to Florida after more than six months from the sale, there is no use tax?(https://www.floridasalestax.com/flo...rida-airplane-florida-use-tax-considerations/)
Sorry, but this is really making my head spin!
Click to expand...

You are correct. If you buy elsewhere, then move it to FL after 6 months, there is no payment to Florida. Also, have your tax guy check into a S-Corp instead of an LLC in FL. As a non-resident it may be different, but for us FL residents, there is no real tax savings between and LLC and an S-Corp, and the S-Corp gives you 'better' protections. (FL does not have corporate taxes for S-Corps. It is 'rolled' into our personal tax liabilities, but currently FL does not have a personal tax for residents.)

I have paid use-tax on 2 aircraft. One purchased here in FL and one from LA. I also paid sales tax on one aircraft 'exchange' in FL.
 
thito01 said:
You are correct. If you buy elsewhere, then move it to FL after 6 months, there is no payment to Florida. Also, have your tax guy check into a S-Corp instead of an LLC in FL. As a non-resident it may be different, but for us FL residents, there is no real tax savings between and LLC and an S-Corp, and the S-Corp gives you 'better' protections. (FL does not have corporate taxes for S-Corps. It is 'rolled' into our personal tax liabilities, but currently FL does not have a personal tax for residents.)

I have paid use-tax on 2 aircraft. One purchased here in FL and one from LA. I also paid sales tax on one aircraft 'exchange' in FL.
Click to expand...
Thank you, the regulation mess in my brain is finally starting to unravel... :)
 
WDD said:
OK. The tax isn’t 40%. It’s some rate applied to 40% of value. That makes more sense.

BTW. - I think different counties may even have their own taxes- Bless their heart.
Click to expand...
Actually, it's the Counties that do the taxing in Georgia, not the state. Each county has it's own millage rate, and yes they vary from county to county.
 
Sifossifoco said:
So please educate me on airplane taxation, sooner or later I may buy one, hopefully this year... What would be the best state(s) to actually buy a plane? And what if you live in a place like Georgia but the plane is held in a company incorporated in a different state?
Click to expand...

Texas. They don't assess sales or personal property taxes on aircraft.
 
It's always best to consult with your state tax department to understand your tax responsibility. Some states charge sales tax, others charge use tax (which may be pro-rated depending on whether or not you were charged sales tax in another state), while others exempt aircraft sales from sales and/or use tax. New York used to charge a pro-rated use tax on aircraft brought into the state (sales tax if sold intrastate), but exempted aircraft from sales or use tax in 2015. NY also exempts aircraft repairs as well, which comes in handy during a major overhaul.

FYI, NY did pursue aircraft sales/use tax scofflaws back in the day, presumably using FAA registration records. It took them a while to catch up with owners, but catch up they did. An owner of a nice Beech A23/24 at my airport ignored several tax collection letters from a 2-3 year-old purchase and wound up having to sell the plane to pay back taxes plus interest plus penalties. So to "save" about $1,500 in use tax, a whole plane was lost.
 
chemgeek said:
It's always best to consult with your state tax department to understand your tax responsibility. Some states charge sales tax, others charge use tax (which may be pro-rated depending on whether or not you were charged sales tax in another state), while others exempt aircraft sales from sales and/or use tax. New York used to charge a pro-rated use tax on aircraft brought into the state (sales tax if sold intrastate), but exempted aircraft from sales or use tax in 2015. NY also exempts aircraft repairs as well, which comes in handy during a major overhaul.

FYI, NY did pursue aircraft sales/use tax scofflaws back in the day, presumably using FAA registration records. It took them a while to catch up with owners, but catch up they did. An owner of a nice Beech A23/24 at my airport ignored several tax collection letters from a 2-3 year-old purchase and wound up having to sell the plane to pay back taxes plus interest plus penalties. So to "save" about $1,500 in use tax, a whole plane was lost.
Click to expand...
That's great to know about New York, as I have just seen an airplane listed on TAP that may fit my mission and is based there :)
 
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