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For high-net-worth individuals considering the purchase of a private aircraft, the benefits of ownership—convenience, privacy, time savings—are clear. But the way you structure your ownership can significantly impact your tax exposure and legal liability. At AVTax Advisors, PLLC, we help clients throughout Florida navigate the complex intersection of aviation and tax law. Whether you’re based in Tampa, Naples, or Palm Beach, choosing the right aircraft ownership structure is a critical first step in protecting your investment and optimizing tax efficiency.
Common Aircraft Ownership Structures
There are several common ways to structure aircraft ownership, each with distinct advantages, challenges, and tax implications. Below, we explore three widely used models: sole ownership, co-ownership, and leasing.
Sole Ownership
What it is: You own the aircraft personally or through a wholly owned business entity (such as an LLC or corporation).
Pros:
- Full control over the aircraft’s use and management
- Simplified recordkeeping and operations
- Potential eligibility for tax deductions if used for business purposes
Cons:
- High upfront and ongoing costs
- Potential personal liability exposure if not held through a liability-limiting entity
- Closer scrutiny from the IRS if business deductions are claimed without clear supporting documentation
Tax Considerations:
If the aircraft is used for business purposes, Florida-based owners may qualify for bonus depreciation and Section 179 deductions under federal law. However, the IRS has strict rules regarding “listed property,” meaning personal use of the aircraft can complicate deduction eligibility. Using a separate LLC to hold the aircraft can help isolate liability and may assist with Florida sales and use tax planning.
Co-Ownership or Joint Ownership
What it is: Two or more parties share ownership of the aircraft, either as individuals or through jointly owned entities.
Pros:
- Reduced capital outlay and operating expenses
- Shared responsibility for maintenance and hangaring
- Attractive for families or businesses with aligned travel needs
Cons:
- Requires clear operating agreements to avoid disputes
- Complicated tax reporting and allocation of deductions
- Use restrictions may arise depending on the co-owners’ purposes (personal vs. business)
Tax Considerations:
Each co-owner’s share of aircraft usage must be tracked to determine eligibility for tax deductions. For Florida-based owners, co-ownership may complicate use tax exposure if one or more parties use the aircraft primarily for personal purposes. Additionally, if the aircraft is housed in Florida, registration and sales tax exemptions may vary based on each owner’s domicile and intent of use.
Leasing (Dry Lease or Wet Lease)
What it is: Rather than owning the aircraft, you lease it from an entity that retains title. A dry lease provides only the aircraft, while a wet lease includes the crew and, possibly, fuel.
Pros:
- No capital investment required
- Flexibility and ease of termination
- Access to aircraft without the burden of ownership
Cons:
- Limited control over scheduling and use
- Leasing costs can add up over time
- Complex regulatory compliance, especially with wet leases (which may trigger FAA Part 135 requirements)
Tax Considerations:
With leasing, lessees generally cannot claim depreciation, but they may be able to deduct lease payments if the aircraft is used for qualified business activities. Lessors, on the other hand, may benefit from accelerated depreciation. Structuring a lease through a Florida-based entity can offer some strategic advantages, including reducing exposure to Florida’s use tax if the lease qualifies for exemption under Florida Administrative Code 12A-1.007.
Specific Aviation Tax Concerns for Florida Owners
Florida is one of the most aviation-active states in the U.S., but it also has complex tax rules that must be considered when acquiring or using an aircraft:
- Florida Use Tax: Even if you purchase an aircraft out of state, Florida may impose use tax if the aircraft enters Florida airspace within the first six months of ownership.
- Sales Tax Exemptions: Aircraft purchased for export or exclusively for commercial use may qualify for exemptions. These must be properly documented and executed.
- Fly-Away Exemption: Florida offers a limited exemption for aircraft purchased in Florida but flown out of state within 10 days. However, using the aircraft for even a short in-state trip before flying out can void the exemption.
At AVTax Advisors, PLLC, we help clients avoid common pitfalls that can lead to unexpected tax liabilities, penalties, or audits.
Choosing the Right Structure for You
Selecting an aircraft ownership structure is not a one-size-fits-all decision. It requires a customized analysis of your flight usage, liability tolerance, tax position, and future plans. For example, a business owner who travels frequently for work may benefit from a sole ownership structure through an LLC. At the same time, a family with infrequent use may prefer the flexibility and cost-sharing benefits of co-ownership or leasing.
Your Trusted Aviation Attorney
Owning an aircraft can be a rewarding investment, but without careful planning, it can also become a tax and compliance burden. The right ownership structure can provide substantial tax savings, legal protection, and operational clarity.
At AVTax Advisors, PLLC, we serve high-net-worth individuals and businesses throughout Florida who seek smart, strategic counsel on aircraft transactions. Our boutique firm is built for aviation-focused legal planning, and we’re here to help you fly forward with confidence.
Ready to optimize your aircraft ownership structure? Contact AVTax Advisors, PLLC, today to schedule a confidential consultation tailored to your aviation and tax planning needs.