Buy Personal Aircraft
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California sales tax generally applies to the sale of vehicles, vessels, and aircraft in this state from a registered dealer. Use tax applies to the sale of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties) or from outside California for use in this state. Generally, although the rates are the same, it is the responsibility of the purchaser to report and pay use tax if the seller did not collect an amount for California sales or use tax from the purchaser.
If you purchase a vehicle, vessel, or aircraft from a private party, from an out-of-state seller, or from a California dealer but took delivery outside this state, you may be required to report the use tax directly to the California Department of Tax and Fee Administration (CDTFA). Use tax on the purchase of vehicles, vessels, and aircraft cannot be reported on your California State Income Tax return. To help you better understand the tax obligations for your purchase of a vehicle, vessel, or aircraft, we have created this guide detailing the tax issues and information important for you to comply with the law.
However, if you sold the vehicle to a third party and you transferred title and registration to the buyer within 10 days after the date you acquired title from the lessor, the lease buyout is presumed to be a sale for resale and is not subject to tax. Use tax will be due, however, if you make personal use of the vehicle prior to reselling it to a third party. Additionally, use tax is also due if you gift the vehicle, rather than resell it, to a third party.
Functional use means use for the purposes for which the vehicle was designed. For example, vehicles designed for personal use are functionally used when merely driven; however, vehicles such as busses or trucks designed for a commercial or other special purpose (e.g., transportation or passengers or property) are not functionally used until used for that purpose.
This election cannot be changed, and if the election is not made timely, then tax must be paid based upon the purchase price of the vessel. If you elect to pay tax based on the fair rental value of the vessel and later make personal use of the vessel, then tax will be based upon the purchase price.
You must report your purchase of an aircraft subject to use tax to the CDTFA. In general, use tax applies to purchases of aircraft for use in this state when an amount for sales tax is not paid to a California dealer. This includes purchases from out-of-state sellers, private parties, or California dealers when delivery of the aircraft is taken out of state. Unless an exemption or exclusion applies, you must pay use tax on your aircraft purchase directly to the CDTFA.
You can report your purchase of an aircraft and pay the use tax by using the CDTFA's online services system and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home under Limited Access Functions.
For example, if you previously paid $15,000 sales or use tax to another state for the purchase of the aircraft and the California use tax due is $20,000, the balance of use tax due to California would be $5,000.
A broker is a person who arranges transactions between buyers and sellers, and who does not have the power or authority to transfer title of the aircraft to the purchaser. A broker is not considered the retailer and, therefore, is not responsible for the payment of tax. If the broker collects and reports the correct amount of tax to CDTFA, you have no additional liability. However, if the CDTFA determines that an insufficient amount of tax was collected and reported, you will be billed for additional tax. For example, if the broker incorrectly collects tax based on an 8 percent tax rate when the applicable tax rate is really 9 percent, you will be billed for the additional tax remaining due.
You can report your purchase of an aircraft and claim an exemption or exclusion using the CDTFA's online services system and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home.
Many tax exemptions and exclusions for aircraft purchases have a test period of 6 to 12 months. If the applicable test period has not lapsed before the due date of your use tax payment, we recommend that you submit copies of documentation currently available. You may submit the remaining required documentation after your test period has expired. (See the below exemptions and exclusions for information on what documentation is needed to support your claim.)
However, when an aircraft purchased outside of California, is first functionally used outside of California, and is brought into California within 12 months from the date of its purchase, it is presumed that the aircraft was purchased for use in California and is subject to use tax if any of the following occur:
If the aircraft enters California within 12 months of purchase, you may overcome the presumption that the aircraft was purchased for use in California by providing the following documentation to support your claim:
Additionally, use tax does not apply to the purchase of an aircraft brought into this state within the first 12 months of ownership exclusively for the purposes of repair, retrofit, or modification. Any repair, retrofit, or modification to an aircraft must be done by a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility. Therefore, the exclusion is inapplicable when an aircraft that enters California during the first 12 months of ownership for the purposes of repair, retrofit, or modification performed by any person other than a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility.
To qualify, you must use the aircraft as a common carrier for more than 50 percent of the operational use during the first 12 consecutive months beginning with first operational use. Generally, if your yearly gross receipts from common carrier operations do not exceed 20 percent of the purchase price of the aircraft or $50,000, whichever is less, it is presumed that you are not using the aircraft as a common carrier.
To calculate the tax rate for a qualifying purchase, subtract 5.00 percent from the tax rate that would normally apply at the location where the aircraft is principally hangared. For example, if the current tax rate in effect is 9 percent, the tax rate for a qualifying purchase would be 4.00 percent.
This exclusion only applies to a purchase that would otherwise be subject to use tax. No use of the aircraft, other than to remove it from the state, can be made. This exclusion does not apply to a purchase from an aircraft dealer subject to sales tax.
Delays for emergency repairs made to the aircraft must be verified as functionally necessary for the aircraft to continue its departure from the state. You must provide supporting documentation such as fuel, repair, hangar, and/or lodging receipts to verify the property's departure from California, plus documentation showing that the aircraft did not return during the applicable test period.
While we all wish we had unlimited funds and that price was no factor in our choice of personal aircraft, the reality is that most would-be aircraft owners must stick within a certain budget when choosing their next plane.
The original Aeronca Champ is a classic, inexpensive tandem plane that used to be a common choice for trainer aircraft. This plane is perfect for enjoying relaxing low, slow flights. With a 4-5 gallon per hour fuel burn, your fuel budget will go a long way. The Champ is a great example of an affordable personal aircraft both in terms of purchase price and operating costs.
There is a reason that the Cessna 150 has a history of being used as a primary training aircraft. It has excellent handling qualities with generous stall warning and aerodynamic stability. The 150 is an excellent choice for new pilots who want to stick with an easy to fly aircraft that they are familiar with.
Once you get your multi-engine rating, you will naturally be excited to move up to a larger, faster, aircraft that is capable of flying at higher altitudes, that carries more passengers, and that offers an extended range compared to the single engine you initially trained on.
The Piper Aztec has smooth, easy handling that make it a favorite multiengine trainer and new owner aircraft. The Aztec was designed with extra passenger and baggage space in mind. Its superior short-field performance coupled with generous fuel and cargo payload capabilities have made it a perennial favorite in the twin piston category.
The Beechcraft Baron is a light twin that has been around since 1961. The original A55 model is still in production today, and Beechcraft has earned a reputation for its quality builds and performance in the light twin category. The big brother Model 58 is also a quality aircraft, but the 55 continues to be popular thanks to its entry level pricing.
The Beechcraft King Air B200 is one of the premier corporate turboprop aircraft choices. This medium size turbojet features a roomy cabin, expansive baggage area and lavatory which are among its key selling points.
One of the most affordable options in the turboprop category is the Piper Cheyenne. AOPA reports that twin turbine aircraft used to be considered unaffordable for private owners, but that perception is changing thanks to lower purchase prices for aircraft like the Cheyenne. Cheyenne owners also appreciate the lower maintenance costs that are more on par with a piston twin than other turboprops.
If you are looking for a larger cabin and increased range while staying under the $2 million price tag, the Dassault Falcon 50 delivers. This SuperMid category jet is roomy and was the first private jet capable of intercontinental range. Prospective owners should be aware that the range and payload capacity capabilities are thanks to a three-engine configuration, so maintenance costs may be higher. Still, the Falcon 50 offers a lot of aircraft for the price. 59ce067264