VALUING AIRCRAFT FOR PROPERTY
California Constitution provides that all property is subject to taxation
(property taxes). In addition to real
property such as land, structures and vineyards, the county assessor is
responsible for the valuation of four main categories of personal property;
boats, aircraft, equipment used in a trade or business and manufactured homes
not on a permanent foundation. For the 2016-2017 tax year, Napa County assessed
253 aircraft with a total value of $52,999,772.
The annual valuation of aircraft as of the January 1 lien date is governed
by specific laws and regulations which require close attention by both assessor
division staff and the aircraft owner.
to California Revenue and Taxation Code Section 5364 the State Board of
Equalization in Sacramento has approved the Aircraft
Bluebook Price Digest, a commercial valuation guide, which the Assessor must
use to assess individual aircraft. The
guide is published each fall and gives a base average value (BAV) for most
aircraft in general aviation use by model and year built. The State Board has also mandated that each
County Assessor use only 90% of the BAV to insure that a conservative valuation
is used as a starting point.
The reduced BAV is then adjusted for a number of
factors. The first factor is the amount
of time on the airframe (usually the total hours the aircraft has flown since
built). The Digest publishers have
researched the average airframe hours for the fleet of each model by year
built. If the subject aircraft being
assessed in Napa County has more airframe hours than the fleet average, a
downward value adjustment is given; if fewer hours, an upward adjustment. The second factor is the number of hours on
the engine(s) since major overhaul (SMOH).
Each aircraft engine must be overhauled after a certain number of hours
based on manufacturer’s recommendations and Federal Aviation Administration
(FAA) regulations. The Digest gives the
estimated cost of the overhaul, say $25,000 and the number of hours between
overhauls, say 1500 hours. Dividing $25,000
by 1500 gives a cost of $16 per hour.
If an engine is less than halfway to overhaul, say 600 out of 1500
hours, there is an upward adjustment calculated by 750 hours – 600 hours = 150
hours x $16/hr = $2,400 increase. If
the engine has 1200 hours on it, the downward adjustment would be 1200-750=450
hours times $16/hr= $7,200 reduction.
The BAV includes a number of items that are considered
standard for that aircraft for that year.
These items include avionics, such as radios, glide slope, autopilots,
electric trim; accessories such as larger fuel tanks and condition issues such
as damage history, original logbooks, compliance with airworthiness directives,
and paint/upholstery condition. Aircraft
owners need to update the
Aircraft Owner Report that they file with this office
annually to make sure that we have the most current information on the items
covered by the BAV so that we can arrive at a correct value.
Finally, California assessment practices require that
sales tax be included with the value because sales tax and other charges such
as delivery have to be paid to put an aircraft (or any item of business
equipment) into service in California. Because the values for each model and
year in the guide are used by jurisdictions across the country, the values do
not include sales tax. Aircraft start
out with a fresh BAV each year because of market fluctuations unlike a desk or
a computer which has an original acquisition cost that includes sales tax and
is then factored each year to arrive at the January 1 value. Thus the sales tax must be added to the
adjusted BAV each year to arrive at a full cash value under California law.
you have any questions please contact Napa County Assessor-Recorder-County
Clerk John Tuteur at 707.253.4459 or by e-mail firstname.lastname@example.org More articles can be found at http://www.countyofnapa.org/Assessor/