Texas Ocassional Sale [Tax Exemption?]

Ernesto Castro said:
Am I understanding correctly that I may be exempt of paying sales tax on the aircraft as it was a transaction between two persons that do not sale aircraft in a regular basis?

All that I've read make me think that I'm exempt, but it sounds too good to be true! Lol.

I would like some input from people that has gone through this already!

Thanks!
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Tax laws change. Just because someone had experience "X" last year doesn't mean anything this year.

You really need to talk to an accountant who understands this type of transaction. Tax guidance from random internet people can result in a very surprising (and expensive) event.
 
Generally speaking if it’s an occasional sale between two private people and you have the correct documentation, it’s non-taxable event in Texas.

You’re looking at the correct reference page from the Comptroller.
 
You are exempt. If it makes you feel better, call the Comptroller's office and make sure. They are pretty helpful.
 
I believe Texas has a fly away exemption for buyers located elsewhere. There is a form to fill out and provide to the seller, but I don't think you need to pay TX sales tax unless the buyer is located there. There are certain rules and restrictions that you should check on though.
 
I strongly agree that hiring a CPA familiar with this subject is worth it. The few hundred spent on that could save you thousands in both dollars and headaches.
 
My experience was some years ago, but the above posts are correct. I would call the tax office (they are helpful) and determine what documentation you may need if they come after you at some time in the future. BTW, if you do have to pay sales tax in Texas, it's the 6.25% state part and doesn't include the 2% available add-on for local entities.
 
TX is also a one party state, meaning you can record the phone conversation without telling the other person, might be a good idea to have their confirmation and name and all that recorded just incase.
 
You don't pay tax on an aircraft purchase in Texas.
 
NealRomeoGolf said:
I swear I should start a niche practice advising on airplane sales tax. Too bad I'm not interested. Pilots are too cheap to pay me enough anyway.
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So you just do it pro bono here. Can you deduct that?
 
You have to fly it out of Texas. I made sure that when I bought my plane there that my first landing was outside of Texas.
 
no need to call anybody its right here in the comptrollers web page under occasional sales. however, you need to get the seller to sign form 01-917 which you can download from the same site.
this is governed by texas admin code 3.316

Texas Administrative Code. (a) Sales exempt. A taxable item that is sold or purchased by way of an occasional sale is exempt from sales and use taxes, except as provided by subsection (i) of this section. ... If three or more sales are made in a 12-month period, then the person must obtain a permit.
however, if you hold a sales and use tax permit in texas then you will need to talk to them.

https://comptroller.texas.gov/taxes/publications/94-168.php
 
DesertNomad said:
You have to fly it out of Texas. I made sure that when I bought my plane there that my first landing was outside of Texas.
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I think that’s not true if you buy it under the occasional sales exemption. Disclaimer: I might not know what I’m talking about.
 
I am a Texas resident. I purchased my plane outside of Texas and was not required to pay sales tax in either the state where I bought it or in Texas. This was ~10 years ago, but afaik the Texas laws have not changed.

Also, in late 2020 (for the first time), I got a letter from the State of Texas saying something along the lines of, "Hey, we noticed there's a plane registered to you. You owe us business tax for the last x years, and if you don't pay by such-and-such date (Jan/Feb-ish 2021), bad things are gonna happen to you." I emailed the office it came from and told them I owned the plane as an individual and it's used for recreation, not business. They told me I still had to return the one-page form that came in the mail, with a statement that the plane was for "recreational use only". The form didn't really have a good place to put that info, so I just shoehorned it in there someplace and mailed it back. Never heard anything further, so I assume that satisfied them.
 
I’ve done two Texas occasional sales purchases. They key thing is to get the seller to sign a statement that he is not in the business of selling airplanes.


https://comptroller.texas.gov/taxes/publications/94-168.php

[URL]https://comptroller.texas.gov/taxes/publications/94-168.php[/URL]


[URL]https://comptroller.texas.gov/forms/01-917.pdf

[/URL]





Ernesto Castro said:
Hi all,

I've just completed the purchase of my first aircraft, a Mooney M20j!!!

I was going through the paperwork, an getting ready to pay 8.25% of the purchase value on Texas sales tax (the AC is now in NH, which has no sales tax). But then I came across the concept of "ocassional sale", I got the information from Texas official site (https://comptroller.texas.gov/taxes/publications/94-168.php).

Am I understanding correctly that I may be exempt of paying sales tax on the aircraft as it was a transaction between two persons that do not sale aircraft in a regular basis?

All that I've read make me think that I'm exempt, but it sounds too good to be true! Lol.

I would like some input from people that has gone through this already!

Thanks!
Click to expand...
 
I have never paid sales tax for any aircraft purchase from an individual not in the business in Texas and it’s a nice perk living here…
 
I’m a Texas resident and purchased my plane out of state under an LLC in 2019. I did not pay sales tax. I believe I also had a bill of sale saying something like “1 dollar over market value”.

I paid $500 to a company out of OKC that put together the sale, registration, title search, 337 search, escrow and bill of sale so I didn’t pay a TX tax. The service was well worth it for me as a first time plane buyer.

I also file a form with the Texas comptroller every year showing I’m not making a profit under the LLC.


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Ernesto Castro said:
Am I understanding correctly that I may be exempt of paying sales tax on the aircraft as it was a transaction between two persons that do not sale aircraft in a regular basis?
Click to expand...

I believe "occasional sale" in Texas applies to any taxable item and not category of item. Seller has to certify "I certify that I do not hold a sales tax permit in Texas or any other state and I have not made a sale of more than one other taxable item within the previous twelve months." Seller can only have sold 1 other taxable item (not just 1 other airplane). Any item sold applies, even if it was a used toaster.
 
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NealRomeoGolf said:
This would not protect you in any way. Tax is based on what you paid. Nothing more, nothing less. But with Texas, that still means zero. :)
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It’s above my level of intelligence what it’s supposed to mean. I just know I did what my accountant said and legally didn’t pay a single tax on the airplane purchase.


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I purchased a wrecked deregistered airplane in pieces. I did not record the sale for 5 or 6 years because it is not airworthy. After I recorded it, Texas comptroller sent me a letter asking for a copy of bill of sale with proof of purchase price on it. When I explained that I no longer have the bill of sale, they sent me a bill for sales tax based on their presumed value of a well equipped airplane in good condition (around $120k more than I paid for it). The sales tax bill was more than the selling price.
 
If you bought from a broker then you owe sales tax in Texas. If you did not get an occasional sales form from the seller you owe Texas sales tax. Your LLC has no effect.

Fracpilot said:
I’m a Texas resident and purchased my plane out of state under an LLC in 2019. I did not pay sales tax. I believe I also had a bill of sale saying something like “1 dollar over market value”.

I paid $500 to a company out of OKC that put together the sale, registration, title search, 337 search, escrow and bill of sale so I didn’t pay a TX tax. The service was well worth it for me as a first time plane buyer.

I also file a form with the Texas comptroller every year showing I’m not making a profit under the LLC.


Sent from my iPhone using Tapatalk
Click to expand...
 
Ernesto Castro said:
I was going through the paperwork, an getting ready to pay 8.25% of the purchase value on Texas sales tax (the AC is now in NH, which has no sales tax). But then I came across the concept of "ocassional sale", I got the information from Texas official site (https://comptroller.texas.gov/taxes/publications/94-168.php).
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I know of those that have used that form, you need to get the seller to sign it. Be sure to follow the spirit and letter - basically the seller must not regularly sell airplanes (broker, dealer, etc).
 
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