I live in Virginia, my father lives in Florida. He wants to add my name to the registration of his airplane, which is hangared in Florida. If he adds me to his registration, will Virginia tax me? I thought the plane had to be physically in the state in order to be taxed.
Virginia people, question.
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Fearless Tower
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Can't say for certain right now, but I'll let you know shortly how long it takes for the State of VA to track down an updated registration (I just changed my address on the aircraft registration from CA to VA).
Not sure how desparate VA is for tax money. I know if it were California, I would recommend NOT having your name/address on the registration if the airplane was being hangared in another state.
JGoodish
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JGoodish
I believe that you would only owe sales or use tax in Virginia if the aircraft was sold in Virginia, or based or operating in Virginia for more than 60 days in a 12 month period. For an aircraft based out of state, my guess is that you would have to prove that the aircraft is based elsewhere. You do get credit for aircraft sales or use tax paid to another state, should you have such tax liability in Virginia.
There is a helpful FAQ here:
http://www.doav.virginia.gov/licensing_aircraft faqs.htm
JKG
wsuffa
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This is where a small amount of money to a qualified professional has the potential to save a LOT of money going forward. At the very least, call the State tax department.
You also need to consider the insurance issues.
You also need to consider the insurance issues.
Getting a will is on my bucket list.
Howard Wilson
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Second the trust idea! h
Would you elaborate?
JGoodish
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Estate planning is a separate issue from sales and use tax liability; the latter appears to be fairly clear-cut at the moment. However, I agree that if estate planning is what he's after, a qualified attorney is probably what he needs.
JKG
There are two aspects to trusts, taxes and estate planning.
Right now, your dad owns the plane outright in his name, right ? If he was to pass away, the aircraft would be part of his estate. Depending on what provisions he has already made, an estate can be administered quick and easy or long and drawn out. Even if he writes in his will 'AL gets my beloved plane', if the aircraft is part of the estate, you will not be able to do anything with it until the administration of the estate is concluded.
I am not sure how it works with the FAA and co-ownership. It would seem to me that if he 'puts you on the title', his 1/2 of the plane would still be owned by his estate and you would be tied to the administrator until everything is resolved.
If your dad puts the plane into a trust with the correct paperwork to make you the beneficiary (or whatever the legalese term) for the case of his passing, you have control of the plane the moment that condition is met (he could also write in there that you get control of the plane if he was to have a stroke or be unable to take care of the plane due to mental decline). There are plenty of hangar queens rotting away around the country because they got entangled in slow or incompletely administered estates. A plane that doesn't fly, doesn't get annualed looses value.
While very few people pay estate tax, trust arrangments also have estate tax consequences. In your case, as you are dealing with one state that collects annual property tax (Virginia) and one tax that aggressively collects a one-time use-tax (Florida), there may also be beneficial or negative consequences to a co-ownership through a trust.
(YMMV, not legal or tax advice. Get some qualified advice on the issue)
Thank you, that's something to think about. My sister is the executor of his will, I don't think that will be a problem, as no one else in my family wants it. He told me he already spoke with an attorney. He already paid tax on it in Florida, and I don't live in Florida, so I don't see how Florida can tax me too.
I'll check out some of these things before signing the registration.
I'll check out some of these things before signing the registration.
If they consider it a 'transfer' and the plane continues to be based in florida, they may (use-tax applies to non-residents). There was a time a couple of years ago when they sent a 60k tax bill to someone who flew his new Malibu to Florida. Took legislative action to reign in the greed a bit. There may be an exemption for intra-family transfers of property, make sure to get an official answer on whether you incur a liability.
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Virginia doesn't collect *ANY* property tax.
Most of the Virginia COUNTIES (and some cities) do.
Technically, you owe personal property tax in your county of residence if your aircraft is housed out of state, but I've never heard of them going after anybody.
Virginia very MUCH does go after you for the sales/use tax. They check both the state aircraft registrations (which you are obliged to pay as well, $5) and the FAA registry. I even got a bill from them after the fact even when I'd paid the tax when I purchased my plane. It's 2%.
You do know that being on the registration/title isn't some sort of "club membership" or even an indication as to what should happen to the plane on the current owner's death? It's giving you half the ownership NOW and while it depends on the state your father resides in at the time of his death, it may not give you anything with regards to his remaining share.
Most of the Virginia COUNTIES (and some cities) do.
Technically, you owe personal property tax in your county of residence if your aircraft is housed out of state, but I've never heard of them going after anybody.
Virginia very MUCH does go after you for the sales/use tax. They check both the state aircraft registrations (which you are obliged to pay as well, $5) and the FAA registry. I even got a bill from them after the fact even when I'd paid the tax when I purchased my plane. It's 2%.
You do know that being on the registration/title isn't some sort of "club membership" or even an indication as to what should happen to the plane on the current owner's death? It's giving you half the ownership NOW and while it depends on the state your father resides in at the time of his death, it may not give you anything with regards to his remaining share.
---> The recommendation to look into a trust.
It may be an elegant way to avoid FL use tax entanglement now, obtain control of the plane in case of an unexpected 'estate case' and only to deal with VA county property tax once the plane is based up here.
wsuffa
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County of residence is not the important part for personal property tax, the county where the vehickle is garaged (hangared, parked) is key - even out-of-state vehicles are subject to the tax if they are garaged (hangared, parked) in the county more than a certain number of days a year. Specifics depend on the county. The fact that you live in a county has no bearing as to whether personal property tax applies - where the vehicle is kept is the critical question.
For Fairfax County (cars only as there are no airports in the county):
Fairfax County DTA said:
Example: I live in one Virginia county, but maintain a vehicle in another county for vacation property. The vehicle is taxable in the other county.
Sales/use tax is a different matter. I do not know whether keeping the plane out of state makes any difference.
poadeleted20
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You might want to check with an aviation attorney in Virginia, just to be sure. If this also involves estate planning, an attorney who works in that field would be a good idea, too.
wsuffa
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One other point on taxes: it is entirely possible that making you 50% owner of the plane at this point could trigger Federal Income Tax (Gift Tax) depending on how things are structured & the value of the aircraft. You really need a good tax and estate planning advisor on that.
What I said was correct, but you didn't bother to pay attention. If your aircraft is garaged in the state, then y es the county where it is garaged has the tax nexus.
If the plane is garaged out of state, the county of your RESIDENCE does come into play. It is up to them to decide if they want to try to tax you.
As I stated, I don't know of any counties (Fairfax certainly doesn't) that tries to collect this from garaged out of state aircraft. In fact, Fairfax has one of the lower tax rates on aircraft (certainly much better than either Culpeper or Frederick (OKV)).
You're wrong again in stating there are no airports in Fairfax County. A good chunk of Dulles is in Fairfax County, it's just that both FBOs are on the Loudoun side of the line. The Udvar-Hazy center is pretty much the only thing of significance on the Fairfax side of the line. In addition, Davidson Army Airfield is in Fairfax County and up until 9/11 there were some civil aircraft based there.
Sales tax doesn't care here the plane is as far as Virginia is concerned. However, unless you put a Virginia address on the federal registration (or attempt to get a Virginia aviation registration), I doubt Virginia will come knocking.
wsuffa
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Not quite. If you look at the applicable State tax code (for reference, it's 58.1-3511), the code states:
Essentially, that means that the situs for a plane owned by a Virgina resident is the place where it is normally parked, unless the plane is registered in Virginia. It is not required to be registered in Virginia until it enters the State. The other exception is if the place where it is parked cannot be established, the residence of the owner applies. (Likewise, if I am a resident of Virginia and I own a vehicle registered in Ohio, Virginia personal property tax does not apply until I am required to register it in Virginia).
Based on the facts presented (partial owner in VA, plane in FL), then there is not situs for the purposes of the Virginia personal property tax as long as the plane is not flown into Virginia (at which point it will be required to be registered and personal property tax would apply)
We don't know if Florida has personal property tax - if so, that credits against Virginia.
That's because it is impractical to do so. The work required to establish situs, and then actual flight into the state is really impractical for the amount of tax collected. Of course, if they choose to follow the California method of "guilty until you prove yourself innocent", all bets are off.
Rather than proclaiming me "wrong" you could have pointed that out in a more civil manner. On a practical level, in the current world, there is no means of parking/hangaring an small GA airplane in Fairfax County such that situs would apply.
I guess if we're talking technicalities, the heliports at the various hospitals (and commercial buildings) would qualify, though again, it's impractical to use them absent a waiver from the FRZ requirements.
Technically, under the Virginia code, it does matter as use tax is due on transactions in Virginia or when a resident first "uses" an aircraft in Virginia. Registration is required after 60 days in Virginia. Yes, Virginia will find out if you use a Virginia address on the FAA registration, but there also needs to be the entry of the plane into the state.
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Fearless Tower
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So here is a question I have.....my plane was purchased 18 months ago in CA. I just changed my address on the aircraft registration to my current Norfolk address. I do not believe i am liable for use tax since the plane was purchased over a year ago, but is VA going to try and come after me anyway based on the registration change of address alone?
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wsuffa
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Where is the plane now? If it's in Virginia, you do have to register with the state, and IIRC (it's been 5 years ago now for me) you have to indicate whether or not you filed Virginia taxes. Assuming you paid California taxes (and that the California sales/use tax rate is greater than Virginia's 2%), you'll need to file a Virginia return but no tax will be due because you get credit for tax to California. Works just like moving a car into the state.
You may owe personal property tax based on where the plane is kept - I don't know the tax rate or aggressiveness of the local authorities in Norfolk/Va Beach/Chesapeake/ wherever the plane is kept. It may simply be a non-issue if the rate is negligible.
Fearless Tower
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Right now, the airplane is still in San Diego. I will submit the VA registration once I actually move it (hopefully in the next 3weeks)
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