Here is what happened to me, I live in Maryland.
When I first registered my kit with the FAA, but before it was
built, I received a demand from the State of Maryland asking for 5% of the “value”
of the plane - $200,000. I responded that the plane was not done (with
pictures) and in any case was in Oregon (it was).
When I finished my plane and moved it to my hangar in Maryland
(KMTN – a “state” airport) I got another notice from the
state again asking for 5% of $200,000. I paid it. I have been told
that the hangars at my airport are periodically inspected and all information
is sent to the State Tax authorities.
Maryland has a “Use Tax” which it applies to planes
and boats that are based in the state. If you have paid sales tax in
another state you can offset Maryland’s “Use Tax”. You
can also prove that the plane/boat is not based in Maryland – my accountant
told me of a story in which a boat owner did exactly that. Otherwise it
is hard to avoid the long arm of the state.
If I was to do it again, I would try to get some kind of shell
corp set up BEFORE I even bought the kit and I wouldn’t base it at a
state airport. On the other hand, I got to deduct the “use tax”
on my taxes.
D. Brunner
N241DB
From: Lancair Mailing
List [mailto:lml@lancaironline.net] On Behalf Of rwolf99@aol.com
Sent: Tuesday, November 02, 2010 3:36 PM
To: lml@lancaironline.net
Subject: [LML] Aircraft Taxes
Lots of good info on aircraft taxes. However, there are
multiple taxes that we should b concerned about.
1) Initial tax (my words). This is tax paid when you
acquire an aircraft. Sometimes it is called sales tax and sometimes it is
called use tax, I think. I do know that if you buy a $100,000 airplane in
another state and pay sales tax there, own it for decades and move to
California, you have to pay a tax equal to California sales tax less any tax
you might have paid way back when. My friend with a Luscombe that he
owned for thirty years cannot afford to bring his airplane back to California
because of this, But some states have exemptions. Colorado exempted
aircraft that were "assembled from parts", i.e. kitplanes, at least
for the initial owner. This was done in an attempt to entice aircraft
manufacturers to relocate to Colorado and the homebuilders benefitted from
this. Sales tax in Arizona, if applied to a $100K Lancair, would
cost more than painting my aircraft, and we know how much *that* costs.
2) Yearly tax. California called this "use
tax". Arizona calls this a registration fee. I'm not too
concerned about this in Arizona because it is 1/2 percent of value (half of
California's annual fee) and I think homebuilts get a break.
I'll call the state, give them the name of a random guy on this
list (just kidding, folks) and report back with what I find out. My info
will be limited to initial registration of a plane built in Arizona, so it will
be of limited interest.