Have you ever heard the saying, “Buying an airplane is easy, but keeping an airplane is the hard part.” You may ask, How is that? Airplanes are so expensive, that can’t be possible. Well, many people will save up to purchase their dream airplane and never consider the cost of keeping one. Let’s discuss what some of those costs are and how they will affect you.

The first of these expenses to consider is aircraft insurance. This insurance is very similar to the insurance you have on your car but usually with higher liability and hull limits. Hull insurance is the amount of coverage you would carry on the value of the airplane itself. So, if the market value of your plane is $200,000., you would carry hull coverage of $200,000. The second half of insurance mentioned was liability coverage. This, just like your car, is how much coverage you want to be covered for considering personal damage to person’s or property while flying your aircraft. A lot of different considerations come into play here, your overall financial situation as well as your assets and ownership in businesses or organizations. The more personal risk you may have, the higher you want this coverage to be. In some instances, the insurance company may only allow for a million dollars in liability coverage on a single engine airplane. In those cases, if you need more coverage, you may need to inquire about an additional “umbrella policy” which will give you the increased liability insurance coverage you may need. Example: I have a business acquaintance who has his own single engine airplane that the insurance company will only allow for one million liability coverage. Since he requires more liability insurance than this, he had to get an “umbrella policy” for an additional 4 million to meet his personal needs.

 

Another one of the expenses that is sometimes overlooked are the property taxes that your state or county may impose on your aircraft. These taxes can be devastating when the bill arrives at the end of the year, especially if it wasn’t expected. The state or county may impose these taxes on both the purchase of the airplane and then each year you own the plane you may get a tax bill for property taxes. These taxes are imposed differently by the state in which you live. It will be based on the assessed value of the aircraft as determined by your state or county auditor. Then they will take the assessed value and multiply it by the applicable rate your government entity will impose. In some cases, these taxes can be in the thousands. There are ways to register the airplane where these taxes may not be a factor to you. If you live in a state that charges property taxes, you may consider registering the plane in a state that doesn’t. Some of the states that don’t charge these taxes are: Delaware, Florida and Nevada, but just because you register you plane there doesn’t mean there won’t be any expense.  In most cases it is a wise decision to consult someone who is knowledgable in these situations and can advise you on which way is best for your specific situation. This of course was not a complete briefing on costs of ownership but these are the ones many people overlook when starting the process for the first time. Instead of taxes these states charge an incorporation fee and some additional user fees. You will just have to do your homework to determine which option is the least expensive for you.
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