The Aircraft Bluebook

[dfw11411]

A few years ago, the local property tax assessor declared the value of my C172 as if it were almost new. At the time, that was a value about 4x its actual value. I filed a protest (requesting a hearing and all their evidence) and a few days later I received a phone call from them. She quickly admitted she had never valued aircraft and had no idea how to do it. She said they use the Aircraft Bluebook which I’ve never seen. I do have access to VREF through AOPA, so I did have some basis for disputing their valuation. Rather than become angry I explained about AFTT, SMOH, and more. I told her to look in the front of the book to learn about deducts. (Yes, I’m a terrible person and didn’t explain to her about upgraded avionics and additions!) She also told me she could not provide the evidence as the publisher of the book forbade it. I soon received a much more favorable valuation and didn’t pursue getting the evidence. The VREF valuation was slightly lower than the Aircraft Bluebook and not worth a fight.

Once again, I’ve received a valuation that I feel is high. I will protest, but I’ve found that the Aircraft Bluebook is a $399 subscription, and our library system doesn’t have it. This time I plan to press them for access to the book, but do any of you have experiences with the Aircraft Bluebook you can share?

 

[Klaus M]

The state of Washington charge an approximate 8% tax on vehicles including aircraft. I showed them the bill of sell and a half a dozen comparables. They accepted the information and even went with the lower value.

Kelly Blue Book only goes back 30 years. I don't believe it's possible to value any older vehicle other than comparables.

 

[ateamer]

I’d also be contacting Bluebook and see if the tax assessor is a current subscriber.

 

[dfw11411]

I believe that Aircraft Bluebook (a division of Informa) is a different company from Aircraft-KBB. A bill of sale doesn't work in this case as they would anticipate a low-ball sale to affect taxation. I purchased my last airplane for $1 plus other valuable considerations.

The protest filing requests their evidence so I'll want to know the edition, how they calculated adds/deducts, and more.

 

[ArrowFlyer86]

I purchased my last airplane for $1 plus other valuable considerations.

But you can't actually claim the sale price was $1 for tax purposes, right?

 

[dfw11411]

Of course not. That would be tax evasion which is a felony. I'm simply saying that a Bill of Sale does not have to show the actual amount paid. In my specific situation, this is not taxation of an aircraft sale, it's the annual property tax. The taxing authority cares not how much you paid for the aircraft (or even a residence). They produce a valuation based upon market data or an independent sources such as Aircraft Bluebook or a certified appraiser.

 

[TCABM]

Price and taxable value are two entirely difference concepts.

Taxable value is generally somewhere around current market value for the object. I protest our property values annually and, by law, the tax appraiser has to provide their evidence. Since that’s a state law, I don’t know what your state requires in that area.

VRef is a good starting point for your evidence. If you have an agreed to value insurance policy, that can also be evidence if you desire it to be.

 

[ArrowFlyer86]

Of course not. That would be tax evasion which is a felony. I'm simply saying that a Bill of Sale does not have to show the actual amount paid. In my specific situation, this is not taxation of an aircraft sale, it's the annual property tax. The taxing authority cares not how much you paid for the aircraft (or even a residence). They produce a valuation based upon market data or an independent sources such as Aircraft Bluebook or a certified appraiser.

Got it. I wasn't sure if there was some round about loop hole that actually allowed you to claim a price of $1.

When I bought mine I had to pay IL based on the purchase price, but you just write the declared value in the form and compute based on that. There was never any discussion with them about valuation.

 

[dfw11411]

Update: I own a C172N leased to a flight school. Because it is used to generate income, it is taxed annually as commercial property. It has been used as a trainer for more than 15 years and has 22,000+ airframe hours. The current engine has 910 hours with a TBO of 2,000. The local appraisal authority uses the Spring Edition of the Aircraft Bluebook (not affiliated with Kelly Blue Book) as it is based upon data from the fourth quarter of the previous year. They use a printed copy, not a digital or online valuation system. This requires old-school page flipping. The Aircraft Bluebook provides a Retail Value for each airplane model ($104,000 for mine) with only two possible deducts for usage time. Interestingly, there are no apparent adds for upgrades. Engine time is not deducted if less than the mid-life TBO. Since mine was 910 hours there was no deduct. I assume there is a percentage deduct for over mid-life, but not a straight-line depreciation. The deduct for airframe time is a chart showing airframe age and usage. Mine was off the chart in both X & Y axes so the maximum deduct of 25% was applied. That yielded a revised valuation $78,000. My original appraisal was for $104k which is why I filed a protest. VREF (available to me through AOPA) showed a valuation that about $77k. The agent had simply forgotten to apply the deduct for airframe usage and age. Throughout the formal hearing the agent tried to blame me for her error. I found that amusing. When I was allowed to testify, I simply said if she'd done it correctly we wouldn't be here.

I have some take-aways that will affect how I handle this in the future. And I do expect this to happen again as this is the third time in 5 years they've done this. Although I had said I was OK with either an informal or formal hearing, the agent scheduled it as a formal hearing. I learned that I could not examine or even see the Aircraft Bluebook in a formal hearing. The agent provided screen captures of only three pages to assess the revised value. It is possible that the agent is still incorrectly calculating the value, but since it was very close to VREF, I accepted it. When I render the required data next Spring I will attach a cover letter reminding them to apply deducts for both airframe and engine time. Depending upon my mood then, I may file a protest regardless and request an informal hearing just to get my hands on this mythical Aircraft Bluebook.

And, yes, I have come to the conclusion they do this on purpose to increase tax revenues. I mean, they can't possibly be this incompetent, can they?

 

[mandm]

What is the tax bill on 78k and what is the savings getting it reduced from 104k to 78k?

Government employees often forget they are supposed to provide a service to the people, rather it seems they try all these scams and fighting people and creating unnecessary delays and barriers. Ask me how I know? (Used to be one) There’s plenty of times I’ve been ripped off, but a couple reasons why I don’t bother:

1) sometimes fighting involves a fee
2) requires your time and research
3) usually requires an in-person visit (or multiple), waste of time, energy and transportation & parking cost

Now this government employee is calculating the values wrong, makes me think it’s across the board. This is discovered, they barely make you “right” and I’m sure they don’t care about the others that they know they did wrong too.

 

[Jeff767]

120 if you have a upgraded panel is probably more accurate. You got a very low appraisal. Be happy!

 

[mandm]

120 if you have a upgraded panel is probably more accurate. You got a very low appraisal. Be happy!

I mean not exactly, it’s about the standard, if they do not have a method for calculating for an upgraded panel.

I’ve seen cities lower the assessed value of properties, and increase the mileage rate. That way you cannot complain, you think your taxable value went down (yay right?) but then the tax rate went up. Now you’re paying more than before and you have no avenue to complain or protest.

Then on top of that, your tax dollars are not going to improve your city, infrastructure etc, (some cities are well maintained but that is not the norm) just to overpay lazy government workers (yes they need liveable wages, life retirement and medical) that cause the budgets to disappear for no outcome.