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Last Updated: 8/21/2017

Taxable Sales

Sales of aircraft are taxable unless an exemption applies. Types of aircraft include:
 
  • airplanes

  • drones or unmanned aircraft systems

  • gliders

  • gyro-copters

  • helicopters

  • hot air balloons

  • kit planes (assembled or unassembled)

  • powered parachutes

  • sail planes

  • ultralights and sport-planes

Note: If an unairworthy or disassembled aircraft keeps a federal aircraft registration number, the sale is taxable.

Sales by Minnesota aircraft dealers

Aircraft dealers must charge the Minnesota general sales tax rate and any applicable local sales taxes at the time of sale, unless the sale qualifies for an exemption. If the sale is exempt, the purchaser must give you a completed Form ST3, Certificate of Exemption.

You must inform the Minnesota Department of Transportation, Office of Aeronautics, about the sale and if it was taxable or exempt from sales tax so the aircraft registration can be completed. For more information, see Registration Information.

Sales by other parties

Buyers may not be charged Minnesota sales tax if they purchase an aircraft from a private party, a business that normally does not sell aircraft, or an out-of-state dealer. But these sales are taxable unless a specific exemption applies.

If you were not charged sales tax, use tax is due when you register the aircraft with the Office of Aeronautics. For more information, see Registration Information.

Aircraft trades

Aircraft trades are fully taxable unless they are handled by a licensed aircraft dealer or lessor.

Trades between individuals

No trade-in deduction is allowed for direct trades between individuals, with no involvement by an aircraft dealer or lessor. Each buyer must register their aircraft and pay Minnesota use tax on its full value.

Trades with a dealer or lessor

When a licensed aircraft dealer or lessor handles the trade, a trade-in deduction is allowed only if both of these conditions are met:

  • The invoice or sales document records the trade and the value of each aircraft
  • Both aircraft have a federal registration number shown on the invoice or sales document

Even with the trade-in deduction, the buyer may owe sales or use tax. Whether – and how much – tax is due will depend on the value of the two aircraft, as shown in the table below.

What kind of trade was it?

Is sales or use tax due on the trade?

Even trade

No, as long as tax was paid correctly on the initial purchase of both aircraft.

Buyer trades up for higher-value aircraft

Yes, tax is due on the difference in value.

Buyer trades down for lower-value aircraft

No, the purchaser may claim an even trade exemption.

Note: The new owners must complete their own Aircraft Registration, unless a licensed Minnesota aircraft dealer handled the transaction.

Other taxable sales

The following purchases are subject to sales or use tax.

Charging sales tax

If the purchaser picks up the aircraft at the seller’s location, charge the sales tax rate that applies at the seller’s location.

If the seller delivers the aircraft to a different location for the purchaser, charge the sales tax rate that applies to the locatin where the aircraft was delivered.

 
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