Buying an airplane out of state -- tax question

I purchased an out of state plane, Oregon, and live in Kalifornstan... so the Tax man wanted 10% sales tax, AND the use tax.... But, I purchased the plane from my Dad, so it was a family sale, thus no "sales tax",... but still have to pay about $375 / year for the use tax. It is explained on the California tax web site... ya, I know... Clear as MUD!.

You muddled that up pretty well, Glenn. Sales and use tax are identical. The annual tax is property tax, not use tax.

Paul
 
Okay I happen to know quite a bit about this. There is basically no way to avoid property tax. There is a way to avoid the sale/use tax. The easiest way is to keep the plane out of Kalifornia for one year then you can qualify for an exemption. Also best to have the plane in an LLC (most people are using Colorado or Delaware these days). Then you can sell it to another owner in CA and avoid the use tax. Anyway my guess is it's not a very valuable plane and you don't want to keep it out of state for a year. You also don't want to enter into a complicated arrangement like a charter or option to buy etc. etc. The best way is to just give your plane a very low value. It's very important on the bill of sale to write in the price line $1 plus other value considered. When you go to buy the plane have a sales contract for what you think the plane may be worth. The seller may not agree to your low valuation so you can always write another contract offering to pay him the difference for his tow bar/ covers or whatever else. When you go to pay your use tax enclose the bill of sale and your signed contract. I have never heard of the state going after people for a higher assessment if it is somewhat reasonable.
 
Back
Top