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One of the most neglected considerations when purchasing an aircraft is how to properly plan for the sales tax and use tax implications of buying and owning your plane or helicopter. This can be a very costly mistake, as sales tax and use tax can be as high as ten percent of the aircraft’s purchase price, and sometimes even higher.

Even if an aircraft is purchased in a state with no sales tax, or one in which the purchaser has a valid exemption to sales tax, there may still be liability to one or more additional states for the payment of use tax if the aircraft spends even a minimal amount of time in those states.

Many aircraft purchasers rely on sales and use tax advice from a fellow owners or pilots, and too often this suggested tax solution is either outdated or was never a legally viable option. With more and more states aggressively pursuing sales and use tax on aircraft, it is critical to have valid exemptions in place before you close. In addition, each state’s tax laws are different, and therefore the available exemptions, and the requirements to meet qualify for those exemptions, differ from state to state.

Contact us today for a free consultation to learn how we can help you save on sales and use tax. To learn about more items which are commonly neglected when buying an airplane or helicopter, click here.

 

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Buying a plane or helicopter is a big decision, and one that should not be taken lightly. There are many considerations to be made during the acquisition process, and it is not uncommon for certain items to be neglected. Here is a list of six important items that are commonly overlooked.

1) Not Documenting the Terms of the Agreement in Writing. An aircraft transaction almost always involves a significant amount of money and a multitude of individual agreements between the buyer and seller. Often, the parties will discuss the terms verbally, come to what they think is “meeting of the minds”, and move forward with the purchase and sale of the aircraft without a written agreement.  However, as the transaction progresses, it is not uncommon for the parties to find that either they failed to discuss one or more of the critical items in the transaction, or that they never actually came to an agreement on certain terms in the first place. This could cause unanticipated expenses for one or both parties and could lead the transaction to fall through. If the transaction does not occur, and there has been any money spent in anticipation of the purchase, there may now be a disagreement as to who is responsible for covering these costs. Additionally, if a deposit has been made to the seller, the return of this money could also be disputed or delayed.

Many aircraft owners and buyers think that they would rather conduct the transactions on a handshake, because they don’t want to “complicate” matters by spending the time to reduce the agreement to a writing. However, it is often the case that the purchase agreement would actually simplify matters by insuring that the parties come to a mutual understanding with regards to each item before either side has made a substantial investment. If the terms of your transaction are properly documented, you will greatly reduce the likelihood that you are left in limbo if a disagreement or unexpected event occurs.

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