Tax Guide for Purchasers of Aircraft 中国人 한국인 ਪੰਜਾਬੀ Español Tiếng Việt

For example, if you live in Anaheim, California, but keep your aircraft in Long Beach, California, you must pay tax at the rate charged in the city of Long Beach.

You can look up the current rate by address on our Find a Sales and Use Tax Rate webpage. You may also find a list of current and historical rates on our California City & County Sales & Use Tax Rates webpage.

For example, if you purchase an aircraft for $50,000 and give the seller your current aircraft valued at $30,000, and $20,000 in cash, you owe tax on the entire $50,000 purchase price.

For example, if you previously paid $15,000 sales or use tax to another state for the purchase of the aircraft and the California use tax due is $20,000, the balance of use tax due to California would be $5,000.

A broker is a person who arranges transactions between buyers and sellers, and who does not have the power or authority to transfer title of the aircraft to the purchaser. A broker is not considered the retailer and, therefore, is not responsible for the payment of tax. If the broker collects and reports the correct amount of tax to CDTFA, you have no additional liability. However, if the CDTFA determines that an insufficient amount of tax was collected and reported, you will be billed for additional tax. For example, if the broker incorrectly collects tax based on an 8 percent tax rate when the applicable tax rate is really 9 percent, you will be billed for the additional tax remaining due.

If the broker collects an amount for sales or use tax but fails to report it to the CDTFA, you will be credited for the amount of tax paid to the broker provided you have a receipt from the broker showing the amount of tax paid to that broker.

You can report your purchase of an aircraft and claim an exemption or exclusion using the CDTFA's online services system and selecting the option to File a Return or Claim an Exemption for a Vehicle, Vessel, Aircraft, or Mobile Home.

Many tax exemptions and exclusions for aircraft purchases have a test period of 6 to 12 months. If the applicable test period has not lapsed before the due date of your use tax payment, we recommend that you submit copies of documentation currently available. You may submit the remaining required documentation after your test period has expired. (See the below exemptions and exclusions for information on what documentation is needed to support your claim.)

However, when an aircraft purchased outside of California, is first functionally used outside of California, and is brought into California within 12 months from the date of its purchase, it is presumed that the aircraft was purchased for use in California and is subject to use tax if any of the following occur:

• The aircraft is purchased by a California resident.
• The aircraft is subject to property tax in California during the first 12 months of ownership.
• If purchased by a nonresident of California, the aircraft is used or stored in California more than one-half of the time during the first 12 months of ownership.

If the aircraft enters California within 12 months of purchase, you may overcome the presumption that the aircraft was purchased for use in California by providing the following documentation to support your claim:

• A copy of your purchase agreement.
• A statement signed by the seller verifying the date and location of the aircraft's delivery out of state.
• Flight logs from the date of purchase until the date of delivery and for the next 12 months.
• Aircraft or engine maintenance logs showing the total engine hours recorded since the date of purchase.
• Evidence of registration with the proper out-of-state authority.
• Evidence of tax paid to another state.
• A copy of the insurance policy for the aircraft.
• Tie-down, hangar rental, fuel, repair invoices, and maintenance receipts from the date of delivery and for the next 12 months. These documents should identify the aircraft by tail or serial number.
• Credit card/bank statements supporting the location and use of the aircraft from the date of out-of-state delivery and for the next 12 months.

Additionally, use tax does not apply to the purchase of an aircraft brought into this state within the first 12 months of ownership exclusively for the purposes of repair, retrofit, or modification. Any repair, retrofit, or modification to an aircraft must be done by a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility. Therefore, the exclusion is inapplicable when an aircraft that enters California during the first 12 months of ownership for the purposes of repair, retrofit, or modification performed by any person other than a repair station certified by the Federal Aviation Administration or a manufacturer's maintenance facility.

Notes

*For purposes of this exclusion, a licensed repair facility must hold an appropriate permit issued by the CDTFA and must be licensed to do business by the city, county, or city and county in which it is located if the city, county, or city and county so requires.

A qualifying family member includes a:

• Parent
• Grandparent
• Child
• Grandchild
• Spouse or registered domestic partner (as referenced in Family Code section 297.5).
• Brother or sister (related to you by blood or adoption), if the sale occurs when both are minors.

The exemption does not extend to purchases from stepparents or stepchildren if a natural parent or child is not involved or there is not a legal adoption. The exemption also does not apply to transactions between ex-spouses after a decree of divorce.

For example, a purchase from your biological or adopted child would qualify as an exempt family transaction; however, a purchase from your stepchild generally would not.

To qualify for the exemption, you must supply documentation to support the family relationship, such as birth certificates, marriage license, and/or adoption paperwork.

To qualify, you must use the aircraft as a common carrier for more than 50 percent of the operational use during the first 12 consecutive months beginning with first operational use. Generally, if your yearly gross receipts from common carrier operations do not exceed 20 percent of the purchase price of the aircraft or $50,000, whichever is less, it is presumed that you are not using the aircraft as a common carrier.

Documentation needed to support your exemption claim:

• Copies of the operator's FAA certification.
• FAA registration documents.
• A list of the operator's certified pilots.
• A complete copy of the insurance policy.
• A complete copy of the aircraft flight logs from the date of delivery and for the next 12 months of operational use. (Note: Copies of actual flight logs are required.Computer print-outs are not acceptable.)
• A summary that describes each flight during the first 12 months of operation.
• A complete copy of the aircraft or engine maintenance logs.
• A complete copy of the sales contract which verifies the purchase price, purchase date, and delivery date and location of the aircraft.
• A complete copy of the lease agreement if the aircraft is leased.
• A copy of all lease payment invoices made to the lessor (owner) by the lessee (operator).
• Copies of the operator's customer revenue billings showing the amount charged on all charter flights.

To document that use tax does not apply, you must supply documentation to support the following:

• You took delivery of the aircraft outside of California.
• You first functionally used the aircraft outside of California.
• One half or more the flight time traveled by the aircraft during the six month period immediately following the aircraft's initial entry into California must be commercial flight time traveled in interstate or foreign commerce. The term “commercial” applies to business use and excludes personal use.

Documentation needed to support your claim:

• A copy of your purchase agreement.
• A statement signed by the seller verifying the date and location of the aircraft's delivery out of state.
• Flight logs from the date of purchase until the date the aircraft initially entered California and for the following six months. The logs should demonstrate that itineraries and hours are carried forward to each successive flight entry.
• A flight log summary that describes the business purpose of each flight claimed as interstate or foreign commerce.
• Documentation to support the business purpose of each flight claimed as interstate or foreign commerce. This documentation may include, but is not limited to, meeting minutes, signed affidavits from third parties, or email correspondence regarding business trips.
• Copies of maintenance logs and repair invoices verifying the aircraft's total air time at various dates throughout the exemption period.
• A copy of your federal income tax return for the applicable test period showing depreciation of the aircraft as a business asset.

The partial exemption applies only to the state general and fiscal recovery funds portion of the sales and use tax, currently 5.00 percent.

To calculate the tax rate for a qualifying purchase, subtract 5.00 percent from the tax rate that would normally apply at the location where the aircraft is principally hangared. For example, if the current tax rate in effect is 9 percent, the tax rate for a qualifying purchase would be 4.00 percent.

Note: The state rate portion of the sales and use tax is subject to change. The rates used in this example are for demonstrative purposes only. You must use the rate in effect at the time of the sale. Current tax rates can be found on our website.

Three requirements must be met for the partial exemption to apply. The item must be:

• Purchased for use by a qualified person.
• Used primarily (50 percent or more of the time) in producing and harvesting agricultural products.
• Qualifying farm equipment and machinery.

If any of these three requirements are not met, the partial exemption does not apply.

For more detailed information about farm equipment and machinery, see Regulation 1533.1, Farm Equipment and Machinery and publication 66, Agricultural Industry.

Documentation needed to support your exemption claim:

• A copy of your purchase agreement.
• A copy of your most recent federal or state income tax return with Schedule F, Profit or Loss from Farming.
• FAA registration verifying the aircraft is classified for agricultural use.

This exclusion only applies to a purchase that would otherwise be subject to use tax. No use of the aircraft, other than to remove it from the state, can be made. This exclusion does not apply to a purchase from an aircraft dealer subject to sales tax.

Delays for emergency repairs made to the aircraft must be verified as functionally necessary for the aircraft to continue its departure from the state. You must provide supporting documentation such as fuel, repair, hangar, and/or lodging receipts to verify the property's departure from California, plus documentation showing that the aircraft did not return during the applicable test period.

Please contact your local county assessor's office for more information.