Buying a private jet is a multi-week legal and financial transaction that runs on aviation-specific escrow, a federal title transfer through the FAA, and a mechanical inspection at a certified repair station, with prices from roughly $3 million for an older light jet to well over $70 million for a new ultra-long-range cabin. Learning how to purchase a jet properly means treating it as a regulated asset transfer rather than a large consumer purchase: the wrong entity, a missed lien, an incomplete inspection, or the wrong operating category can each cost hundreds of thousands of dollars or leave you with an aircraft you cannot legally fly.
Match the Aircraft to How You Will Actually Fly
Start with two numbers: how many passengers you need to carry and how far you need to go without stopping. A four-seat light jet built for two-hour domestic hops is a different asset from a 16-seat ultra-long-range cabin built for transatlantic flights. Then look at the airports you plan to use. Shorter runways and higher-elevation fields eliminate certain models, and finding that out after signing a letter of intent is expensive.
Once you have a shortlist of types, look hard at the specific tail number. Total airframe hours and engine cycles tell you how much life is left in the major components and drive resale value. Ask whether the engines are enrolled in a maintenance program such as Honeywell’s Maintenance Service Plan or a JSSI program. These programs convert unpredictable overhaul bills into hourly payments, enrollment transfers with the aircraft, and an enrolled engine is worth meaningfully more than one without coverage.
Ask for the complete logbooks. You want continuous records showing regular service at authorized maintenance centers. Gaps or a string of short-term owners can signal deferred maintenance or unresolved mechanical issues, and aircraft with clean documentation histories both sell faster and hold value better.
Hold Title Through an LLC or a Trust
Most jet buyers do not register the aircraft in their personal name. The standard structure is a single-purpose limited liability company that owns the aircraft. That separation limits exposure from any incident involving the jet to the LLC’s assets rather than reaching your other holdings, and it makes a future sale simpler because you can transfer the entity instead of running a full FAA title transfer.
Privacy is the other reason. The FAA aircraft registry is public, so anyone can search an N-number and see the registered owner. Titling through an LLC keeps your name off the registry, and a handful of states, including Delaware, Nevada, New Mexico, and Wyoming, allow anonymous LLCs that do not publicly disclose members.
Non-U.S. citizens who want an American N-number face a different requirement: the aircraft must be held by a trust with a U.S. citizen trustee. The trustee submits an affidavit confirming either that all beneficiaries are U.S. citizens or resident aliens, or that no non-citizen beneficiary holds more than 25 percent control over the trustee’s authority. A certified copy of the complete trust instrument, an ink-signed bill of sale to the trustee, and an application for registration listing the trustee as applicant all get filed together.1Federal Aviation Administration. Aircraft Registration
Show the Money Before You Shop
Sellers and brokers will not run due diligence for a buyer who has not proven funds. Cash buyers need a Proof of Funds letter from a bank or financial institution. Financed buyers need a Letter of Interest from a lender stating the down payment, interest rate, and repayment period. Without one or the other, experienced sellers assume you are browsing.
Aviation lending is a specialized market. Loan-to-value ratios, required down payments, and interest rates vary by aircraft age, type, and borrower profile. Lenders with aircraft portfolios typically want to see your operating plan and projected annual costs on top of the standard creditworthiness review. If the aircraft is Cape Town Convention eligible, the lender will also require International Registry filings before funding.
The Letter of Intent, Purchase Agreement, and Escrow
Negotiations open with a Letter of Intent setting the purchase price, deposit, inspection timeline, and the basic conditions each side must meet before closing. Deposits go into a dedicated aviation escrow account with a neutral third-party agent. Deposit size ranges from roughly one percent of the price to as much as ten percent depending on the transaction, the aircraft’s demand, and leverage.
After the LOI, the transaction moves to the Aircraft Purchase Agreement, which is the binding contract and needs to be precise. The APA defines the delivery condition the seller promises at handover, identifies the aircraft by make, model, serial number, and registration, and allocates responsibility for taxes, inspection cost, and inspection outcomes. Most APAs include a threshold: discrepancies below a set dollar amount are the seller’s obligation to repair, and anything above that gives the buyer the right to walk away and recover the deposit.
Opening the escrow account requires both buyer and seller to provide identification and corporate formation documents. Escrow agents enforce Know Your Customer procedures, and anyone reluctant to provide a passport or government-issued ID should expect the transaction to stall.2National Business Aviation Association. Fraud Mitigation Now an Essential Tool in Every Aircraft Transaction The escrow agent holds the deposit and later the bill of sale, releasing nothing until both sides confirm all closing conditions are satisfied.
The Pre-Purchase Inspection
The pre-purchase inspection is where you learn what you are actually buying. The aircraft goes to a neutral FAA-certificated repair station holding a Part 145 certificate for the specific type.3eCFR. 14 CFR Part 145 – Repair Stations Neutral means a shop the seller does not regularly use, which removes any incentive to overlook problems.
Technicians physically examine the airframe for corrosion, structural fatigue, and evidence of previous damage or improper repairs. Engines get a borescope inspection, with a camera fed through ports to examine internal turbine components without disassembly. Avionics, landing gear, and pressurization systems all go through functional checks against the manufacturer’s standards. For a mid-size jet, expect two to three weeks and roughly $10,000 to $30,000.
Alongside the physical work, a records audit verifies every flight hour, maintenance event, and component replacement. Technicians confirm compliance with all Airworthiness Directives, the FAA’s legally binding safety mandates.4eCFR. 14 CFR Part 39 – Airworthiness Directives Missing AD compliance records can ground the aircraft entirely. Mandatory Service Bulletins from the manufacturer get the same scrutiny.
As issues surface, the facility produces a discrepancy list separating airworthiness items from cosmetic ones. Airworthiness discrepancies have to be corrected before the aircraft can legally fly. Cosmetic issues become bargaining chips. Your aviation attorney or broker uses the list to negotiate repairs at the seller’s expense, a price reduction, or in serious cases, to exercise the walk-away clause and recover the deposit.
Clear the Title Before Closing
You need a clean title before funds move. The FAA Aircraft Registration Branch maintains records of ownership and any security interests recorded against an aircraft, but does not perform title searches for you.5Federal Aviation Administration. Aircraft Registration – Clear Title Hire an aircraft title search company or an aviation attorney to pull the records and confirm there are no unreleased mortgages, security agreements, tax liens, or mechanic’s liens on the airframe or engines.
If the search turns up an existing lien, it has to be discharged before closing. The secured party signs a release, either the FAA’s Conveyance Recordation Notice form or a standalone document identifying the specific lien, and submits it to the registry.5Federal Aviation Administration. Aircraft Registration – Clear Title Skip this step and you inherit someone else’s debt attached to your aircraft.
Insurance Before the Aircraft Moves
You cannot close on a jet without insurance in place, and most APAs require proof of coverage before the aircraft moves for inspection. Two policies are involved. Hull insurance covers physical damage to the aircraft itself and is typically written for the full purchase price. Liability insurance covers bodily injury and property damage to third parties, with limits of $5 million to $25 million or more standard for business jets depending on size and use.
Premiums depend on aircraft type, pilot experience, and claims history. The policy must name both the owner entity, usually the LLC, and any lender as additional insureds. Lenders specify minimum hull and liability amounts as a loan condition. Getting quotes early prevents last-minute delays at closing.
Closing Day and the FAA Title Transfer
Closing revolves around a coordinated call among the buyer, seller, their attorneys, the escrow agent, and often the title company. The parties confirm that every APA condition has been met: inspection discrepancies resolved, liens cleared, insurance in place. The buyer then authorizes the escrow agent to release the funds.
Once the seller confirms receipt, the escrow agent files two documents with the FAA Civil Aviation Registry in Oklahoma City. The first is the Aircraft Bill of Sale, Form AC 8050-2, signed by the seller exactly as their name appears on the existing registration.6Federal Aviation Administration. Form AC 8050-2 – Aircraft Bill of Sale The second is the Aircraft Registration Application, Form AC 8050-1, submitted by the buyer or the buyer’s LLC or trustee.7Federal Aviation Administration. AC Form 8050-2 Aircraft Bill of Sale Information and Preparation The registration fee is $5.1Federal Aviation Administration. Aircraft Registration
The synchronized release of funds and filing of documents is the heart of closing. The seller does not give up the bill of sale until the money arrives, and the buyer does not release funds until the filing is ready to go. That choreography is why experienced aviation escrow agents earn their fees.
After filing, the buyer receives a second copy of the registration application, commonly called the pink copy, which serves as temporary authority to operate the aircraft within the United States. Contrary to a common belief that it expires in 90 days, the pink copy remains valid until the FAA issues the permanent Certificate of Aircraft Registration, denies the application, or 12 months elapse from the filing date.8eCFR. 14 CFR 47.31 – Application Keep the pink copy on the aircraft until the permanent card arrives, which typically takes several weeks.
International Registry Filings for Financed Aircraft
Financed transactions have an extra filing layer many buyers do not anticipate. The Cape Town Convention created an International Registry where lenders record security interests in aircraft and engines. In the United States, the FAA’s Civil Aviation Registry serves as the Authorizing Entry Point for those filings.9Federal Aviation Administration. Aircraft Registration – The Cape Town Treaty
Coverage is not universal. The convention applies to airframes type-certificated to carry at least eight people including crew or goods exceeding 2,750 kilograms, jet engines producing at least 1,750 pounds of thrust, and turbine or piston engines rated at 550 or more takeoff horsepower.9Federal Aviation Administration. Aircraft Registration – The Cape Town Treaty Most business jets clear these thresholds. The lender will require you to register an Irrevocable De-Registration and Export Request Authorization, or IDERA, in its favor, giving it the right to pull the aircraft off the U.S. registry and repossess across borders on default. This is standard in aviation finance; budget for the legal fees.
Sales and Use Tax
The purchase price is not the final number. Most states impose sales tax on aircraft, and 45 states and the District of Columbia have a use tax that can apply to storing or operating an aircraft in state even if you bought it elsewhere. A use tax on a $30 million jet at 6 to 8 percent is $1.8 million to $2.4 million, which catches unprepared buyers off guard.
Several exemptions can reduce or eliminate the bill. A fly-away exemption, available in many states, applies when the aircraft is purchased in one state and promptly moved to another within a specified period. An interstate commerce exemption may apply if the aircraft is used predominantly for business across state lines. Isolated or occasional sale exemptions cover private transactions that do not involve a dealer. Each has paperwork requirements and deadlines, and an aviation tax consultant is worth the fee; getting an exemption wrong triggers the full tax plus penalties and interest.
Federal Depreciation and Excise Tax
Business aircraft used more than 50 percent for qualified business purposes are eligible for bonus depreciation under IRC Section 168(k). Following passage of the One, Big, Beautiful Bill Act, qualified property acquired after January 19, 2025 is eligible for permanent 100 percent bonus depreciation, allowing the full cost to be deducted in the year the aircraft is placed in service. For certain aircraft, taxpayers may alternatively elect 60 percent in the first taxable year ending after January 19, 2025 instead of the full 100 percent.10Internal Revenue Service. Interim Guidance on Additional First Year Depreciation Deduction under Section 168(k)
Federal excise taxes also apply to certain air transportation, with a per-segment tax on domestic taxable air transportation of $5.30 for 2026. Amounts an aircraft owner pays for management services on their own aircraft are exempt from excise taxes under Sections 4261 and 4271, provided the aircraft is not fractionally owned, leased for less than 31 days, or used for scheduled seat-by-seat commercial service.11Internal Revenue Service. Publication 510 (12/2025) Excise Taxes These rules interact with your ownership structure and operating model, so involve a tax advisor with aviation experience before making elections.
Part 91 vs. Part 135 Operations
How you operate the aircraft after purchase determines which federal regulations govern your flights, and getting it wrong has severe consequences. If you fly the jet for your own purposes, whether business travel or personal, you operate under Part 91, which sets baseline rules for airworthiness, pilot qualifications, and flight operations.12eCFR. 14 CFR Part 91 – General Operating and Flight Rules
The moment you provide the aircraft and a pilot to someone else for compensation, even indirectly, you cross into Part 135 territory, which requires an air carrier certificate, stricter maintenance schedules, crew training programs, and operational oversight. The FAA defines compensation broadly. Chartering the jet to offset costs, carrying a client’s employees, or letting someone use the aircraft in exchange for non-monetary consideration can each trigger Part 135. Operating commercially without the certificate can result in pilot certificate suspension or revocation and can void your insurance entirely, because the insurer priced a private operation, not a commercial one.
Narrow exceptions keep some flights in Part 91: expense-sharing arrangements where the pilot pays at least a pro-rata share of fuel, oil, and airport fees, and flights that are merely incidental to your primary business. The margins are thin and the FAA interprets them aggressively. If you have any plans to let others use the aircraft, get a written opinion from aviation counsel before the first flight.
Budgeting for Ongoing Operating Costs
The purchase price is the down payment on a long relationship with recurring expenses. For a mid-size business jet, annual operating costs typically run $500,000 to $800,000 depending on hours flown. The major categories:
- Two full-time pilots for a mid-size jet run $170,000 to $400,000 per year including benefits, varying by experience and market.
- Covered hangar storage runs $30,000 to $100,000 annually depending on the airport and aircraft size.
- Jet fuel typically accounts for 25 to 35 percent of total operating costs, with a mid-size jet burning roughly 200 to 220 gallons per hour.
- Routine maintenance and reserve contributions for major overhauls generally run 5 to 10 percent of aircraft value each year, with engine maintenance programs spreading overhaul costs into predictable hourly rates when enrolled.
- Combined hull and liability insurance premiums range widely, from around $15,000 for very light jets to $85,000 or more for ultra-long-range aircraft.
These numbers accrue whether you fly 50 hours a year or 400. Fixed costs like crew, hangar, and insurance do not scale with usage, and buyers who underestimate operating expenses often sell at a loss within a few years. It is the most common mistake in private aviation ownership and the one that proper planning prevents.