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When does a kit become an aircraft (for tax purposes)
Any CA builders ever been in this situation: registered their kitplane w/FAA in year N, but didn't get final inspection, a/w cert, and make first flight until year N+1?
Did you receive a personal property tax bill from the county for tax year N+1, and if so, did you bother trying an appeal on the basis that it wasn't (yet) assessable as an aircraft? The CA Tax and Revenue code defines an aircraft* as "...any contrivance used or designed for the navigation of or for flight in the air _which has been flown at least once_..." (Emphasis added.) The lien date for assessing aircraft property tax is Jan 1st each year, but despite having an FAA N-number, a kitplane that has not flown is not yet assessable as an aircraft. Assuming the kitplane flies in year N+1, it is assessable in year N+2 and thereafter until its FAA registration is cancelled. Always a dilemma, deciding if it's worth standing up to the tax man saying, "Notice me!" :eek: ___ *Part 10, Chapter 1, sect. 5303 (a). |
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If you're correct that it should be deffered until next year, which it appears it should per your quote; they will likely take care of it quickly. Edited to add: Looked up your registration on FAA website, you can show the airworthiness information is all blank may help for documentation. |
Unfortunately, no. The first person to answer the phone at the assessor's office said yes, having flown is a necessary condition. But she passed me to her supervisor, who thinks that registration alone is what makes the kit and airplane. We chatted for a while but it was clear he either didn't know about the first flight definition or for some reason thinks it doesn't apply.
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As far as the FAA is concerned, the "project" becomes an airplane upon being issued an airworthiness certificate.
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If you follow up again, I find it works best to make your tone assume he's right but you just wan't to better understand. "You obviously know more about this than me, but when I searched online and read the definition at Part 10, Chapter 1, sect. 5303 (a). it looks to me like the state doesn't define it as a taxable airplane until it's flown once, what am I missing?" If he still is adamant, then you have to decide if the formal appeal is worth the hassle compared to the bill |
The description in your last paragraph is how the county down here interpretes the tax codes. A couple of us have been told if it is registered and flys for the first time after 1Jan then you won?t see a property tax bill until the following year. I first flew in March ?18 and haven?t seen a letter from the tax man so far.
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Reserved N number
I had them send me a bill the same year I reserved my N number, years before completed. In the end I did first flight in November and they registered it the following year.
Don't let their simplistic scan of FAA N numbers throw you. |
I received a notice every year when I reserved a N number. Every year I sent the form back with a letter stating it was a kit not an aircraft. Never heard anything from them until the next year. That went on for several years.
Now that is flying I'm sure they will send me a tax bill after I submit the form this year. |
I built my airplane in Kalifornia and registered it two years before I had the Airworthiness Certificate. I also got a tax bill the following year. I let Tax Collector know that it was still a collection of parts. The bill went away with that notification. The airplane first flew in September 1997. I let the Tax Collector know in November that it was now a flying airplane. They sent me the tax questionnaire in 1998, then the tax bill, and I paid the personal property tax for the first time in 1998.
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But the sales tax will cause some pain.........:eek: Don't ignore it, it grows over time with interest......:( |
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