While tax considerations are basically simpler for aircraft sellers than for aircraft buyers in the US, several important matters still require care and attention, as Chris Kjelgaard reports...
At a surface level, the tax considerations facing aircraft sellers in the United States are simpler than they are for aircraft buyers – not cheaper in terms of tax liabilities due, but simpler.
“From the seller’s viewpoint, for tax mitigation you look at the recapture of depreciation and what you need to do to address that,” Scott Burgess, Partner at Aviation Legal Group outlines.
In terms of tax liability arising from aircraft sales, the only thing US sellers must bear in mind is the amount of federal (and possibly state) income tax for which they will be liable on any capital gain they realize on selling their aircraft, he adds.
If the seller sells the aircraft but does not replace it, then they’re liable for the income tax due on the amount of capital gain they have realized.
But if they replace the aircraft they’ve sold with a different aircraft, then they will be able to use the depreciation amount available from the replacement purchase to offset some, or all, of the income tax which would have otherwise been payable.
For instance, if a seller bought an aircraft for $10m originally and during their ownership has depreciated it on their balance sheet to $5m, selling the aircraft for $9m, the seller is left with a $4m capital gain on which federal income tax would be due for that tax year, Burgess illustrates.
Depending on whether the seller is an individual or a corporation, the federal income tax rate on that $4m capital gain would vary from 37% to 21%. The level of state income tax due would vary depending on the state in which the corporation or individual is officially resident – and in some US states they would be liable for very little or no state income tax at all.
This article was originally published by AvBuyer on October 2, 2025.