Tax bill for reserved N-number

[Jekyll]

I took out a builder loan on my plane and part of the loan application paperwork was to fill out the registration form. Unbeknownst to me, the loan company submitted the form to the FAA. Several months later, I received my registration from the FAA followed by a tax letter from the state about a month after that.

I paid the tax on the amount of the investment at that time. I was a bit angry but, now realize that the state has taxed me and I've paid. I think that book has been closed.

[Dave Cole]

Originally Posted by wilddog

I don't think you have an airplane until you have an airworthness certificate. It is just parts without one.

In Virginia, a homebuilt aircraft is considered a taxable asset when it is issued a registration certificate by the FAA, even though it may not have an airworthiness certificate.

[guccidude1]

Guys: You might want to think of an early property tax bill in another light. I know a guy who received a tax bill after reserving a N-number and all he had was the tail kit. He paid the few dollars they wanted and every year he gets the same tax bill for just the tail kit. Apparently, when he registered the airplane and the state accessed the FAA paperwork, the tax dude looked him up and saw he was already on tax rolls, no further action required. As far as I know he is still flying that airplane and his annual tax bill is just a few dollars per year based on his tail kit. Knowing the tax auditors are never wrong, he has forgone the opportunity to disabused them of their correctness. Dan

[N64GH]

Yea but if they ever figure it out it is going to hurt.

[longranger]

In California it's the county, not the state that levies property tax. I've had an N-number reserved for 4 years, and no tax bill from Kern County. They do however bill be for propery tax on the dirt I LEASE from the city on which my hangar sits.

At the rate I'm going, I'll be retired and saying bye-bye to California before that number gets assigned to an airplane.

[Lemmingman]

My mistake was assuming that they were assessing me for having a plane. He kept using terms like 'airplane' 'airworthy' etc. I made the argument that right now it isn't an airplane, its just a pile of aluminum sitting in my garage. I also pointed out that airworthiness was the sole domain of the FAA and the State didn't have the authority to call something a plane that even the FAA doesn't.

He called all over the state trying to figure out what to do. I took that as a sign that more Arkansans need to build experimental aircraft.

Eventually he came back with the excuse that they were taxing the parts, not the plane. His argument is that parts (new, spare, reconditioned...whatever) are taxable. I ran out of arguments and it's only $16 a year. But I fear that now that they know I'm here, I have to claim my wings and fuse, etc. And he made it a point that the engine HAS to be reported at the time of purchase (RATS!).

[Jack Tyler]

There are of course two tax issues WRT buying and building a plane. Some states have annual personal property tax assessments on capital goods (cars, planes, boats) - where this thread began. Other states (such as mine, Florida) don't annually assess tax on those kinds of assets. However, it's far more common (tho' still not universal) for states to have a sales or use tax assessment in place for such assets (which I think at least one or two of the above posters are referring to). As I learned when calling up the Tallahassee's Dept. of Revenue, Florida expects one to pay sales tax on the value of each kit as it's received. (They of course expect us to pay sales tax on virtually everything we buy...). Unlike most purchases, however, Florida gets help from the U.S. Coast Guard (when it comes to documented vessels) and the FAA (for planes), so that sooner or later one receives a (sales) tax assessment from the State, even if the kit purchases were 'invisible' to the State. And related to this, if one later transfers the aircraft to another state, that payment of sales tax may be considered as the basis for avoiding (or reducing) the use tax the second state may levy on the asset.

But here's a question I'd welcome comments on: Why invite this tax issue a year or three before it's necessary? Why file for an N number well ahead of when the kits are close to becoming an a/c, when one can avoid the assessment of sales tax (and for states like California, assuming one is home building, the annual personal property tax) that the N number generates? One might lose a chance for a given N number if waiting, but wo't there be 'new' N numbers available at a later date that aren't available earlier? Beyond the satisfaction of holding an N number, doesn't filing for one just make life more complicated and more expensive sooner? I realize it's a very popular thing to do...but perhaps out of ignorance, I just don't get it.

Jack

[rv9aviator]

I did it because I went to a lot of trouble getting the number I wanted and wasn't about to give it up. I found the number I wanted and it was on a experimantel test plane that had since been scrapped. The fellow had also passed away several years ago. His wife was kind enough to go through all the hurdles of giving up the number so I could get it transferred to me. It took about a year before I actually got it done. Now I have N9JW and it's all mine.

[DanWright]

Originally Posted by longranger

In California it's the county, not the state that levies property tax. I've had an N-number reserved for 4 years, and no tax bill from Kern County.

I am hoping they follow suit for me as a fellow Kern Country resident.

[Caummisar]

If they want to tax your plane that doesn't exist, can't you just pay it with imaginary money?