How To Calculate Costs When Buying and Selling Aircraft

Calculating expenses when buying and selling aircraft involves considering various costs associated with the transaction. These expenses can vary depending on the specific circumstances of the deal, the aircraft’s value, and other factors.

When Buying an Aircraft
The Purchase Price is the actual cost of the aircraft, which can vary widely based on the type, age, and condition of the aircraft. You’ll need to pay for a professional pre-purchase inspection of the aircraft. The cost can vary depending on the complexity of the inspection and the size of the aircraft. To ensure a clear title and secure the transaction, you may incur fees for a title search and escrow services. If you’re financing the purchase, consider interest payments, loan origination fees, and other financing-related expenses. Depending on your location and local regulations, you may be responsible for sales tax, use tax, or other applicable taxes on the purchase. You may need to pay for insurance coverage during the purchase process, particularly if you’re financing the aircraft. If the aircraft is not located where you plan to base it, you may incur expenses for ferrying the aircraft to your desired location. Legal and administrative expenses can include attorney fees for contract review and other transaction-related services.

When Selling an Aircraft
If you’re using an aircraft broker or listing service, you may need to pay listing fees and a commission to the broker upon the successful sale of the aircraft. To attract buyers, you may need to invest in a pre-sale inspection and make necessary repairs or maintenance to ensure the aircraft is in good condition. Expenses related to advertising and marketing the aircraft to potential buyers, including photography, listing fees on marketplaces, and promotional materials. Similar to the buyer’s expenses, you may need to cover title search and escrow fees to ensure a smooth transaction. Legal fees for contract preparation and administrative costs related to the sale. If you’re working with a broker, they may charge a commission for their services upon a successful sale. Depending on your jurisdiction and local regulations, you may be responsible for sales tax on the sale of the aircraft. If you have an outstanding loan on the aircraft, you’ll need to pay off the loan balance from the proceeds of the sale. If the buyer requires the aircraft to be delivered to a different location, you may need to cover delivery expenses. While this is an expense for the buyer, it’s important to be aware that buyers may negotiate for you to cover the cost of their pre-purchase inspection as part of the deal.

To calculate your net gain or loss from selling an aircraft, subtract the total expenses associated with the sale from the sale price. Similarly, when buying an aircraft, consider all expenses in addition to the purchase price to determine the total cost of acquisition.

It’s essential to work with professionals, such as aviation attorneys and aircraft brokers, to navigate the buying and selling process effectively, understand your financial obligations, and ensure a smooth transaction. Additionally, your financial situation, tax considerations, and local regulations may impact the expenses you incur during the transaction, so consult with experts as needed.