It’s a question that aircraft owners and airport-based businesses have been asking for decades—why are there inevitably long waiting lists for hangar rental at just about every GA airport in the country?
A Case Study: Why Investment in Airports Remains a Challenge
Key Takeaways:
- The article highlights a nationwide shortage of general aviation hangar space, attributing it to significant disincentives for investment in new construction.
- A primary obstacle is the discrepancy where airport commissions classify hangars on leased land as "Personal Property," while the IRS defines them as "Real Property" for tax purposes (due to a 1988 lawsuit), resulting in an unattractive 39-year depreciation schedule.
- This tax classification, combined with short-term land leases (often 5-10 years) and other challenges like restrictive zoning codes, makes banks reluctant to finance and investors unwilling to undertake new hangar projects.
- Amending the 1988 IRS McManus decision through legislative action is proposed as the crucial step to reclassify hangars on leased land for tax purposes and stimulate a boom in construction.
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