Cost to play based on where 'toys' kept

Posted: Monday, November 25, 2002

When it comes to owning a plane or watercraft in the Kenai Peninsula Borough, property owners truly do have to pay to play. How much they pay varies depending on several factors -- the main one being where that property is kept.

Tax rates and tax policies differ from city to city within the borough, and the borough's rates and policies are mirrored by some cities, but not all. As a result, a plane or boat owner's tax bill could change if they relocate their property from one city to another or from a city to an unincorporated area of the borough.

"It really gets convoluted," said Clyde Johnson, personal property appraiser and auditor for the Kenai Peninsula Borough.

In the borough and in borough cities, personal property, meaning boats and planes, is taxed. Business personal property, including any items used to run a business -- like fishing gear, hotel furniture, office equipment, tools and machinery -- also is taxed.

The borough exempts the first $100,000 of the assessed value of aircrafts and business personal property from the tax.

So if a pilot kept a plane that was worth $100,000 or less in Nikiski, Sterling or some other unincorporated area of the borough, they wouldn't have to pay property tax on it. Any amount of value more than $100,000 would be taxed at the borough's mill rate of 6.5 mills, plus any additional taxes that cover the area the plane is kept in, like a hospital service area tax, for instance.

This example holds true in Homer and Soldotna, because these cities have adopted the $100,000 tax exemption for aircrafts and business personal property. So if someone keeps their plane worth $90,000 at the Soldotna airport, they don't pay property tax on it. If that plane is worth $125,000, however, the owner will be taxed at the borough's mill rate on that $25,000 and at the city's mill rate.

Keeping a plane in Seward, Seldovia or Kenai costs the owner more in taxes because these cities have not adopted the borough's $100,000 tax exemption. Any aircrafts kept in these areas are taxed by their assessed values.

For watercrafts, the borough and the cities of Soldotna and Homer charge a yearly flat tax based on the vessel's length, rather than its assessed value. Vessels less than 20 feet in length are not taxed by the borough, Soldotna or Homer.

The borough flat tax schedule is as follows: vessels that are 20 feet to less than 25 feet in length are taxed $50 a year; vessels 25 feet to less than 36 feet are taxed $150; vessels 36 feet to less than 60 feet are taxed $250; vessels 60 feet to less than 100 feet are taxed $500; and vessels 100 feet or more in length are charged $1,000.

Soldotna's flat tax schedule is the same as the borough's. Homer's rates are much cheaper. Vessels that are 20 feet to less than 25 feet are taxed $10 a year; vessels 25 feet to less than 36 feet are taxed $30; vessels 36 feet to less than 60 feet are taxed $50; vessels 60 feet to less than 100 feet are taxed $100; and vessels 100 feet or more in length are taxed $200.

Seward, Seldovia and Kenai are again the exception. They tax all vessels located within city limits based on the vessel's assessed value. Even boats less than 20 feet in length are taxed.

In addition to the city taxes, vessel owners who keep their boats in these cities also are charged the borough's flat tax.

The decisions to tax boats a flat tax and planes in the borough based on their value were not related. The different tax systems were not set up to favor boat or plane owners over one another, but rather was a response to specific circumstances, said borough finance director Jeff Sinz.

The flat tax system for vessels was proposed by two borough assembly members who thought a flat tax would be a boon to harbor communities, Sinz said. It went into effect Jan. 1, 1998.

"They did that primarily because of a belief that a flat tax would be a lower tax and would be an economic development stimulus within the harbor and port communities," Sinz said. "... It was a special situation that applied to boats that they were trying to address."

Airplanes are still taxed on the basis of their value, rather than having a cheaper flat tax applied. The $100,000 borough tax exemption for aircraft was implemented Jan. 1, 1999, to give private plane owners a tax break.

"(The exemption) by and large would exempt personally owned and operated planes from taxation and would leave commercially owned and operated airplanes still on the roles," Sinz said.



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