Taxes on airplane sales

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4RNB

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4RNB
I purchased a plane a couple years ago, this year it should be done with all planned upgrades, which have been $ignificant. While we are likely to keep this plane a long time, I'd like to keep proper records in case we end up selling or trading up.

As it is now, the value of my plane is a lot higher and I assume that we would owe long term capitol gains taxes. What do I need to do to prove the plane is worth more because of the work I've had done? In other words, it seems like any capital appreciation is mostly due to the money invested and taxes ought be avoided.

On the other hand, what happens if I end up selling the plane for less than purchase price plus improvements? If that happens, I'd like to take the tax loss legally.

Plane is owned by individual, not a corporation.
Thank you for your insight!
 
4RNB said:
I purchased a plane a couple years ago, this year it should be done with all planned upgrades, which have been $ignificant. While we are likely to keep this plane a long time, I'd like to keep proper records in case we end up selling or trading up.

As it is now, the value of my plane is a lot higher and I assume that we would owe long term capitol gains taxes. What do I need to do to prove the plane is worth more because of the work I've had done? In other words, it seems like any capital appreciation is mostly due to the money invested and taxes ought be avoided.

On the other hand, what happens if I end up selling the plane for less than purchase price plus improvements? If that happens, I'd like to take the tax loss legally.

Plane is owned by individual, not a corporation.
Thank you for your insight!
Click to expand...
Is the individual going to use it in a business?
 
4RNB said:
I purchased a plane a couple years ago, this year it should be done with all planned upgrades, which have been $ignificant. While we are likely to keep this plane a long time, I'd like to keep proper records in case we end up selling or trading up.

As it is now, the value of my plane is a lot higher and I assume that we would owe long term capitol gains taxes. What do I need to do to prove the plane is worth more because of the work I've had done? In other words, it seems like any capital appreciation is mostly due to the money invested and taxes ought be avoided.

On the other hand, what happens if I end up selling the plane for less than purchase price plus improvements? If that happens, I'd like to take the tax loss legally.

Plane is owned by individual, not a corporation.
Thank you for your insight!
Click to expand...

Tax loss as an individual. Hahahahaha.
 
EdFred said:
Tax loss as an individual. Hahahahaha.
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Huh?
If I buy stock or real estate and sell it at a loss, then get the tax loss. Isn't same true for a plane?
 
4RNB said:
Huh?
If I buy stock or real estate and sell it at a loss, then get the tax loss. Isn't same true for a plane?
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I talked to the IRS earlier this year about claiming losses in 2022, and they told me sorry, no can do. Best part was, I had to pay income on a net loss. Awesome.
 
4RNB said:
Huh?
If I buy stock and sell it at a loss, then get the tax loss.
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That's actually a tricky one. But, in most cases you can only use the loss to offset gains in other stocks. In most cases you can't use a loss to offset normal income. At least that's how it has always worked for me.
 
AlphaMike said:
That's actually a tricky one. But, in most cases you can only use the loss to offset gains in other stocks. In most cases you can't use a loss to offset normal income. At least that's how it has always worked for me.
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Turbotax carries net investment losses over to future tax years.
 
So if I buy a car, drive it for 10 years, sell it for less that what I paid for it, do I get to list it as a capital loss? No

I like your creativeness, but the IRS will not.
 
Keep receipts for upgrades to increase your cost basis. Maintenance doesn't count. Otherwise it is just price sold minus cost and that is your gain. Don't expect to be able to use an aircraft for personal travel use as an investment loss. That won't go over well.
 
Now I understand all of those airplane for-sale ads that quote "100k invested" when describing catch-up maintenance
 
My understanding is the sale of any asset you own can create a capital gain or loss, but for tax purposes, realized (you actually sold it) capital losses can be used to reduce your tax bill only if the asset sold was owned for investment purposes. So IOW if you sell stock at a loss, that can reduce your taxes, but sale of an asset like your car or plane can't as those aren't considered investments. I'm sure there's tons of exceptions and rules that come into play so talking to a tax pro would probably be the best advice.
 
tsts4 said:
My understanding is the sale of any asset you own can create a capital gain or loss, but for tax purposes, realized (you actually sold it) capital losses can be used to reduce your tax bill only if the asset sold was owned for investment purposes. So IOW if you sell stock at a loss, that can reduce your taxes, but sale of an asset like your car or plane can't as those aren't considered investments. I'm sure there's tons of exceptions and rules that come into play so talking to a tax pro would probably be the best advice.
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If selling and buying cars or planes is your business or you do it enough to be considered a business , then it has to be reported on your taxes.
If the car or plane is considered a collectible, it must be reported and is taxed at a different rate than stocks.
 
This seems to explain all those planes that are sold for “$1 and other valuable considerations”......
 
So, am I reading here that nobody has had to pay cap gains taxes on plane sales when used for personal non business purposes?
 
So, am I reading here that nobody has had to pay cap gains taxes on plane sales when used for personal non business purposes
 
You are correct. No capital gains taxes on personal airplane sale.

Edit - apparently you do pay cap gains on personal items. Got to live the IRS
 
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4RNB said:
So, am I reading here that nobody has had to pay cap gains taxes on plane sales when used for personal non business purposes
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What @Palmpilot said. The government bleeds you dry. You have to pay on the gain and can't take a loss.
 
I think the general rule of thumb is if you make a profit/income from an activity somebody wants a cut.
 
WDD said:
Well shoot. I was wrong. Appreciate the link!
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We are not used to this because of how much everything always depreciates! (also because of the homeowners exemption)
 
So, has anyone here paid cap gains on a plane sale?
Then back to original question, how do I keep track (for the tax man) to prove that most if not all of any potential gains came from significant improvements I made?
 
4RNB said:
So, has anyone here paid cap gains on a plane sale?
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I know honest people who have when they sell for more than they put into it.
4RNB said:
Then back to original question, how do I keep track (for the tax man) to prove that most if not all of any potential gains came from significant improvements I made?
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Like anything else in the known tax universe. Receipts for the improvements.
 
4RNB said:
So, has anyone here paid cap gains on a plane sale?
Then back to original question, how do I keep track (for the tax man) to prove that most if not all of any potential gains came from significant improvements I made?
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No....I have not. Bought and sold two planes....never paid anything on the gains. And no one has asked for it.
 
I don't recall ever putting my SSN down for an airplane buy or sell.
 
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