Cleared for Takeoff? Understanding California's Aircraft Personal Property Tax

California law treats aircraft as taxable tangible personal property subject to an annual appraisal and local property taxation. Unless a specific statutory exemption applies, every aircraft owner with aircraft that is based in or habitually hangered in the state faces an annual filing obligation, potential penalties for noncompliance, and a valuation process that can significantly affect the resulting tax bill.

Many counties, including Los Angeles County, have recently increased their enforcement efforts for noncompliance. With the April 1 filing deadline for 2026 aircraft property statements now passed, this Holland & Knight alert summarizes the key compliance requirements so that aircraft owners and operators – and their advisors – can plan ahead for the next assessment cycle.

California's Legal Landscape

California's Revenue and Taxation Code requires an annual assessment for property taxes of non-commercial aircraft that is regularly or "habitually situated" in California.¹ Qualifying aircraft are assessed at their tax situs – the location of the airport or hangar where the aircraft is regularly or "habitually situated." This distinction matters: The county where a private aircraft is habitually based has exclusive assessment authority. Temporarily removing an aircraft from the county on the January 1 lien date will not defeat the tax situs or exempt the aircraft from property taxes if the aircraft is regularly or habitually located in that county.

Who Is Affected

Any person or entity that owns, claims, possesses or controls an aircraft in California on the January 1 lien date is potentially subject to the state's aircraft personal property tax. This includes aircraft used for personal or pleasure purposes, flight training, rental and charter/taxi operators, businesses, fractional ownership program participants and show/museum operators. The assessor for the county in which the aircraft is habitually hangered identifies aircraft subject to the personal property tax through information received from the California State Board of Equalization (BOE), the Federal Aviation Administration (FAA), reports from airport operators, on-site inspections of airports in the county and other public and private sources.

The January 1 lien date is the critical reference point. The owner of the aircraft on that date is responsible for the ensuing year's taxes regardless of any subsequent sale. This means that if the aircraft is sold after January 1, it is still liable for the ensuing fiscal year's taxes because the aircraft was owned on January 1. If the aircraft was sold before January 1, the new owner will be responsible for paying the taxes for the new tax year.

Filing Requirements, Valuation Information and Penalties for Noncompliance

To comply, aircraft owners are required to file an annual Aircraft Property Statement (Form BOE-577) with the county assessor by April 1 each year. The statement requires detailed disclosures, including:

• FAA registration number, manufacturer, model, year built and serial number
• Purchase date, purchase price and date moved to the county
• Aircraft location
• Aircraft condition (when purchased and current) for airframe, interior and exterior
• Damage history and equipment leased, exchanged, added or retired
• Total airframe hours, engine details (make, model, year, horsepower, hours since new, hours since major overhaul, time between overhauls and overhaul dates)
• Avionics summary – reporting only added or replaced non-factory avionics, their date of acquisition, costs and condition
• Type of usage (personal/pleasure, flight training, rental, charter/taxi, business, fractional ownership program or show/museum)
• Ownership type (proprietorship, partnership, corporation or other) and any changes in ownership or sales within the last calendar year

Once the Aircraft Property Statement is filed, the assessor then determines the aircraft's current market value considering factors such as those described above, and a tax is assessed based on the market value of the aircraft.

Failure to timely file the Aircraft Property Statement triggers a mandatory penalty of ten percent of the market value of the unreported aircraft being added to the value of the aircraft. However, if the failure to file the annual Aircraft Property Statement was due to reasonable cause and not willful neglect, the county BOE or the assessment appeals board may order the penalty abated, provided that a written application for abatement of penalty was timely filed.

Exemptions and Special Cases

Aircraft of Historical Significance

A property tax exemption is available for "Aircraft of Historical Significance," defined as aircraft that is an original, restored or replica of a heavier-than-air powered aircraft that is 35 years or older or any aircraft of a type or model of which there are fewer than five in number known to exist worldwide. To apply for the Aircraft of Historical Significance Exemption, a claim form must be filed each year with the assessor of the county where the aircraft is habitually hangered (BOE-260-B). The claim must be filed with the assessor on or before 5 p.m. on February 15 for the preceding January 1 lien date to receive the full exemption. If the claimant fails to file the claim form by February 15 but files on or before August 1, the claimant is eligible for a partial exemption.

Armed Forces Members

A person who is not a resident of California but is present in the state solely by reason of compliance with military orders may declare tax situs elsewhere by filing Form BOE-261-D, which is obtainable with the local county assessor or the person's unit legal officer.

Practical Compliance Steps

Aircraft owners and operators – and their advisors – should consider the following steps to maintain compliance with California's aircraft property tax requirements:

1. Confirm where your aircraft is habitually hangered and which county assessor has jurisdiction. Remember that temporary absence from the county on January 1 does not change situs.
2. Calendar the annual April 1 filing deadline for the Aircraft Property Statement well in advance. Late filing triggers a mandatory 10 percent penalty on the market value of the aircraft.
3. Maintain current records on aircraft condition, total airframe hours, engine time, avionics additions and replacements, and any damage or repair history – the assessor relies on these factors in determining market value.
4. Ensure any sales, relocations or ownership changes are promptly reported, and retain copies of sales contracts for submission.
5. Verify that the declaration on the Aircraft Property Statement is properly executed by an authorized signatory. An improperly signed or unsigned statement is not valid and may expose the owner to penalties.
6. Evaluate whether your aircraft may qualify for an exemption and note the February 15 (full exemption) or August 1 (partial exemption) deadlines for the historical aircraft exemption.

Holland & Knight's Private Wealth Services Group can assist aircraft owners and operators with property tax compliance, valuation challenges, penalty abatement requests, exemption applications and related matters. If you have questions, please reach out to the authors.

Notes

¹ California Revenue and Taxation Code sections 5362-5368.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.