What kind of tax will I owe annually in Alabama?

[Junglepilot]

I am very close to buying a RV-8 project in Florida. But I got a chill tonight when someone asked about the annual use tax in Alabama on an RV and threw around figures with lots of zeros..

Does anybody know about that? I live in Lee County (near Auburn University).

What am I looking at for a fairly valued/finished RV-8 annually? $500, $1000, $10,000?

[Webb]

I'm moving there and have wondered about this. Perhaps someone out there can let tell us.

So far this is what I've dug up:


810-4-1-.09 Valuation of Aircraft.
(g) The tax lien shall attach to ?kit? or ?self-assembled? aircraft at the time it is inspected and approved as airworthy. Prior to inspection and approval as airworthy, the market value of the ?parts? will be their cost and the cost will be used as the basis each year until the inspection and approval of airworthiness is achieved. The cost will be indexed using the index using the index factors for the October 1 of each tax year in which the parts are reported.
(h) Any aircraft that is reported as not airworthy is subject to property tax on the lien date of October 1 each year.

GUIDELINES FOR THE ASSESSMENT OF AIRCRAFT SHALL BE:
a. All aircraft are assessed as Class II property (20% of market value).
b. The retail value in the valuation guide provided by the Department of
Revenue shall be the basis for determining the market value of the aircraft. The
market value shall be 89% of the retail value of the aircraft, adjusted for condition,
avionics, etc., to arrive at a fair market value.
c. The purchase price, plus any additional cost for rebuilding or modifications,
will be the basis of assessed value when a value is not provided in the valuation
guide. The assessed value will be determined by taking 20% of the total cost.
However, the assessed value shall not go below the $500 minimum assessed
value for aircraft.
d. Airplanes used exclusively for the purpose of crop dusting are exempt from
ad valorem tax. A taxpayer should claim the exemption at the time the property is
assessed.
e. Aircraft are to be assessed in the county in which the aircraft is generally
based, departs from, and returns to in its normal operation. The tax lien attaches
to all aircraft with situs in the state on October 1 for collection one year later. If an aircraft is not physically in the state on October 1, this does not mean the aircraft is not taxable for the entire year. If the aircraft is normally kept in the state, even though it may have been out of the state on October 1, it would be taxable.
f. The tax lien shall attach to assembled aircraft at the time it is inspected and
approved as airworthy.

So if I get this right, if my RV has a retail value of 90K, That means the market value is $80,100. 20% of that is $16,020. According to mill rate for the state of AL is 6.5, that would be an annual personal property tax of $104.13.

[Junglepilot]

$104/year is doable. I will be talking to my local tax office today and post something.

[Webb]

Originally Posted by Junglepilot

$104/year is doable. I will be talking to my local tax office today and post something.

Don't forget about the sales tax. I think that is the one that nails everyone. You probably should ask them about that.

I took the kit receipts from Vans and did a voluntary pay for Mississippi. Aircraft are taxed at 3% or if you do each kit separately, it would have been 7% for our county. I took all the kit receipts all at one time and paid the airplane tax. It was done with the N number registration form.

I'm hoping that all I'll have to face is personal property tax on this one.

[DanH]

Sales OR Use tax, one time, at purchase.

Business Personal Property tax, annual, every year.

The Revenue Department (here in Montgomery) has gotten real good at checking for new in-state aircraft registrations. Self-declare, or expect a letter in the mail asking about use tax. For kit parts, you can file a use tax return at time of purchase, or declare on your annual income tax return, which has a provision for use tax.

Your annual Business Personal Property tax will be billed by the Lee County Tax Assessor's Office. No pain in calling them and asking for a tax estimate.

[Webb]

I called the Baldwin County Property Tax Office and according to them, the Vref is used to calculate the retail. Here's the best part. If it isn't in there, and it's a kit plane, the value of $5,000 is used for prop tax.

State mill is $6.5 per thousand. Baldwin Co is $4.3 per thousand. If the plane is in state before Oct 1st, 2009 - you pay for 2010. If not, then you pay next year for 2011.

This is only a guess, but if the kit in FLA that you are buying has had sales tax paid on the kit, then you can show that to your state as proof of sales tax. If not, I think you are probably going to have to pay it.

[JDRhodes]

Time for new wheels and skirting for the Governor's mansion, I guess

[Junglepilot]

What is the verdict on "second hand" kits. I bought my project third hand (third builder on it).

I can and will check here in Alabama, but wondering if anybody knows if that is not an issue. I was told by a DAR nearby in Georgia that second-hand kits are not liable for sales tax after sales tax paid by original buyer.

I understand that the property or use tax will be an annual issue, but wondering if I am in the clear on the sale tax with this kit (sales tax was paid on it many moons ago by the original purchaser).

Thanks

[Auburntsts]

Sandy,
Is that Toomer as in Toomer's Corner and Toomer's Drug Store of fame?

War Eagle!

Todd
Class of '88

[Junglepilot]

No we are not exactly the same but related.

My family ancestors came from same town in England, but settled in Hilton Head.

I graduated from "the other school" but moved here in 2002 after 8 years overseas with Mission Aviation Fellowship as a pilot/mechanic in Shell, Ecuador.

We do own the main coffee shop and are a commercial coffee roaster here in Auburn (www.ToomersCoffee.com)

War Eagle!

Sandy