Purchasing an Aircraft & Taxes: By the Numbers
Hopefully you’ve been following my newsletter updates. With each I try to cover material that will help you take informed steps when purchasing high priced aircraft or vessels. Or even some specialized vehicles. You’ve heard us talk a lot about how Aero & Marine Tax Professionals can save you money. The thing is, we’re not talking about a few hundred here or maybe a few thousand there. Advice from a tax specialist can save an aircraft purchaser anywhere from tens of thousands to millions.
Purchasing a Helicopter for Resale
Not all purchases are done by the final user. Like any other product, aircraft purchased for resale have a variety of tax exemptions. Dealers will have all the necessary tax experts to keep their tax obligation low, but companies that don’t specialize in resale aren’t in the same boat.
This is exactly what happened when a helicopter charter company bought a helicopter for resale. By working with us, they were able to get all of their exemptions filed correctly to save them from a $81,000 tax bill.
Using Multi-State Registration to Save on Sales Tax
TA national farming company purchased a Cessna Citation XLS+ to help them reach remote areas all over the country. Traveling to a wide variety of states makes choosing the home state tricky, with hundreds of thousands of dollars in sales tax at state.
With the right advice, filing, and actions, the company was able to save $930,000 in sales tax.
Sales & Use Tax Exemptions
Multi-state purchases can instantly make things more complicated. If you’ve read our other articles, then you know just how complicated they can get. Basically, sales tax is charged where the aircraft is purchased, while use tax is charged where the aircraft is based. There are a bunch of exemptions and complications involved that we help our clients navigate.
Take this example:
The owner of manufacturing company was purchasing a new Cessna Citation CJ4 jet. We guided them through the correct paperwork to file for various sales and use tax exemptions. In the end, we were able to save them $720,000 in taxes.
International Companies Aren’t Automatically Exempt
If your company does business across the world, it’s easy to focus on the country laws and not the state tax codes, but those same state tax codes still apply, and they can take a big bite out of your funds.
A perfect example is the International IT Company that we helped. They purchased a Gulfstream GIV SP to handing the long range flights they needed. With us guiding them, they received a full tax exemption in California that saved them $1.4 million.
Even Accounting Experts Can Use a Specialist
Almost everyone that we deal with has their own accountants, tax specialists, or a variety of lawyers they can consult. The thing is, they have a broad, general focus. We specialize only on the taxes involved in aircraft and marine purchases. This makes us so good at what we do that other accounting experts will come to us for help.
Take the CPA firm in the Central Valley, CA. Their client had an ownership transfer of an airplane, and that transfer was going to trigger a pretty steep tax bill. They contacted us, and we were able to save their clients $98,000.
We’re Not Just Saying This to Brag
Well, okay. We’re bragging a little. With results like these, it’s kind of hard not to. But the key takeaway here is that these are real numbers from real clients.
Are you wondering how the numbers could possibly get that high? Take a look at a Gulfstream G350. A brand new G350 (a recent version of the GIV) goes for $33.25 million. If one of these was purchased in Los Angeles, it would be subjected to a 9% tax, or $2,992,5000. An aircraft tax specialist can help eliminate that tax entirely.
It’s why the best thing anyone can do if they’re thinking of buying a plane or boat is to get consultation with us.