Property Tax Post: Will Rockets Escape the Gravitational Pull of Property Tax?

From SALT Talk Blog

By Emilie Burnette | March 1, 2018

In the past, space travel was solely the purview of NASA and the Soviet Space Program. In recent years, however, private entities such as Elon Musk’s SpaceX and Richard Branson’s Virgin Galactic have increasingly entered the realm. In fact, the recent launch of the Falcon Heavy rocket from the Kennedy Space Center in Florida, raises the question: is all that aerospace equipment subject to property taxes? While property belonging to the federal government is generally exempt from property tax, private entities engaging in space travel do not qualify for any governmental exemptions. Accordingly, property tax exemptions for air and space equipment are now more important than ever.

Many states exempt airplanes and aircraft without addressing whether rockets and space shuttles are included under this exemption. For example, in Florida, where the recent successful launch of the Falcon Heavy rocket occurred at the Kennedy Space Center, airplanes are constitutionally exempt from tax. So, SpaceX may have to argue that its rocket constitutes an airplane of some type in order to avoid property taxes on the Falcon Heavy. Arizona takes a different approach and values personal property devoted to providing aerospace services at its full cash value, unless it was purchased after 2017, in which case it is subject to a depreciation schedule.

In contrast, California exempts tangible personal property that has space flight capacity once it’s installed, manufactured, or assembled from its property taxes. The state lists qualifying tax-exempt property as including orbital space facilities, space propulsion systems, space vehicles, launch vehicles, satellites, or space stations of any kind. Alaska provides some property tax exemptions for aerospace property by exempting the property of the Alaska Aerospace Corporation, a quasi-public organization. Wisconsin has a similar exemption for property owned or leased by the Wisconsin Aerospace Authority if the property is used primarily for the authority’s purpose.

Now that we’ve discussed the taxability of rockets and aerospace equipment, I just want to know where I can book my ticket.

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Should states exempt rockets and aerospace equipment from property taxes?

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