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Capital Gain/Loss when Selling Gliders?
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Six-Seven Romeo
Mar 1, 2016, 10:59:29 AM3/1/16
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I searched in RAS and didn't find anything about taxes.
I live in a state where they have sales tax on aircraft and when buying a glider for tens of thousands of dollars this can be a major impact. Maybe I need to move to Delaware and incorporate!
Sales tax aside, what about capital gain or loss when selling a glider? This certainly applies to personal property (i.e. your home). Does it apply to a $100K glider or is an aircraft more like an automobile? If I sell it for more, then do I have to declare the capital gain? Conversely, it is more likely that I will sell it for less so can I claim a capital loss? Or is this only is the aircraft is related to a business?
So many questions. Expiring minds want to know.
Thanks, John
I live in a state where they have sales tax on aircraft and when buying a glider for tens of thousands of dollars this can be a major impact. Maybe I need to move to Delaware and incorporate!
Sales tax aside, what about capital gain or loss when selling a glider? This certainly applies to personal property (i.e. your home). Does it apply to a $100K glider or is an aircraft more like an automobile? If I sell it for more, then do I have to declare the capital gain? Conversely, it is more likely that I will sell it for less so can I claim a capital loss? Or is this only is the aircraft is related to a business?
So many questions. Expiring minds want to know.
Thanks, John
Craig Reinholt
Mar 1, 2016, 11:10:40 AM3/1/16
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Dan Daly
Mar 1, 2016, 11:48:55 AM3/1/16
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Glidergeek
Mar 1, 2016, 12:27:08 PM3/1/16
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On Tuesday, March 1, 2016 at 7:59:29 AM UTC-8, Six-Seven Romeo wrote:
chip.b...@gmail.com
Mar 1, 2016, 1:59:49 PM3/1/16
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I agree RAS is probably not the best source for tax advice. That said, my impression is that almost any asset that you sell for more than you paid for it is subject to capital gains tax (short or long term), whether it's a security, home, auto, vacation home, or plane. And, yes, there are cases where pilots make money on gliders, in particular when the US dollar has weakened and the prices of new gliders have increased in excess of "normal" inflation.
What's different about the business use of aircraft is, as one poster noted, depreciation. Recapture of that depreciation at the time of sale incurs a tax at ordinary income rates. That doesn't apply to personal use because we don't depreciate our gliders. But if there's a gain at sale, legally that gain much be reported and could, depending on your tax rate, trigger a capital gains tax liability.
Unfortunately, unless there's a business/investment purpose, we can't offset the loss on the sale of a glider against gains on other assets. Heads the IRS wins, tails we lose. Big surprise.
Just my opinion. Interested to see other comments. Your advice and tax liability may vary.
Chip Bearden
What's different about the business use of aircraft is, as one poster noted, depreciation. Recapture of that depreciation at the time of sale incurs a tax at ordinary income rates. That doesn't apply to personal use because we don't depreciate our gliders. But if there's a gain at sale, legally that gain much be reported and could, depending on your tax rate, trigger a capital gains tax liability.
Unfortunately, unless there's a business/investment purpose, we can't offset the loss on the sale of a glider against gains on other assets. Heads the IRS wins, tails we lose. Big surprise.
Just my opinion. Interested to see other comments. Your advice and tax liability may vary.
Chip Bearden
2G
Mar 1, 2016, 3:42:29 PM3/1/16
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1. Amount paid to seller.
2. Import duties, if any.
3. Transportation costs.
4. Inspection costs.
5. Costs to make the glider airworthy.
6. Sales tax.
Costs to maintain the glider after purchase are not a part of the basis or the capital gains calculation. Installation of new equipment, like a transponder, are.
PS the AOPA article, which is quite good, does not address capital gains taxes at all.
Tom
SF
Mar 2, 2016, 1:53:07 PM3/2/16
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You need to talk to a Tax CPA.
Some things to ask:
Should I establish an LLC corporation in Delaware or another property tax friendly state to hold the asset?
Do I have to pay sales tax if I purchase a glider from an individual? Usually sales taxes only apply to purchases from companies that are licensed to collect them.
Ask about use taxes, sometimes those take the place of sales taxes.
Go on some of the RV sites, those guys have some tricks up their sleeves when it comes to avoiding taxes, might give you more questions to ask your CPA
If you want to get real fancy, incorporate in Ireland, then form a wholly owned Subsidiary in Delaware.
SF
Some things to ask:
Should I establish an LLC corporation in Delaware or another property tax friendly state to hold the asset?
Do I have to pay sales tax if I purchase a glider from an individual? Usually sales taxes only apply to purchases from companies that are licensed to collect them.
Ask about use taxes, sometimes those take the place of sales taxes.
Go on some of the RV sites, those guys have some tricks up their sleeves when it comes to avoiding taxes, might give you more questions to ask your CPA
If you want to get real fancy, incorporate in Ireland, then form a wholly owned Subsidiary in Delaware.
SF
Six-Seven Romeo
Mar 4, 2016, 9:29:55 AM3/4/16
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Here is an IRS tip on the subject.
https://www.irs.gov/uac/Capital-Gains-and-Losses-10-Helpful-Facts-to-Know
"Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use."
https://www.irs.gov/uac/Capital-Gains-and-Losses-10-Helpful-Facts-to-Know
"Deductible Losses. You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use."
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