Aug. 27, 2010
Investing in a business aircraft is an expensive undertaking. State and local taxes on business aircraft acquisitions and operations can substantially increase the cost of that investment. For example, taxes in the State of New York can reach 8.75% of the purchase price of a business aircraft.
There are, however, a few exclusions and exemptions in New York law that provide planning opportunities to reduce or eliminate sales and use taxes on business aircraft purchased and/or used in the state. The most commonly used of these are the so-called “Sale-for-Resale Exclusion” and the “Commercial Aircraft Exemption”.
In general terms, a Sale for Resale Exclusion provides an exemption for the sale of an aircraft to a dealer who will hold the aircraft as inventory or to a special purpose leasing entity. In some states the leasing entity concept is used as a primary tax deferral strategy when outright exemption from the tax is not available.
Another provision of the New York sales and use tax law that may exempt a business aircraft from sales and use taxation is the Commercial Aircraft Exemption. The exemption applies to commercial aircraft that are used primarily in intrastate, interstate or foreign commerce.
This article explores the details of both exemptions for aircraft owners and operators in the State of New York.
International Business Aviation Council Ltd.