Change to Law of Foreign Yacht Sales

[Alaskan Sea-Duction]

Florida brokers seek change to foreign-flagged law | Trade Only Today

 

[keb]

So when a boat is foreign flagged, i.e. "not for sale to US citizens in US waters", how is the sale actually done? Transaction closed in say the Bahamas and then the new owner would have to import to the US? What would the costs be to bring into FL? Federal and State import duties and sales tax of ???

 

[BandB]

So when a boat is foreign flagged, i.e. "not for sale to US citizens in US waters", how is the sale actually done? Transaction closed in say the Bahamas and then the new owner would have to import to the US? What would the costs be to bring into FL? Federal and State import duties and sales tax of ???

Yes, much as you describe. 1.5% duty. If relocated to Florida, Use Tax up to a maximum of $18,000.

So, the only real cost over any other boat is 1.5% which on the purchase of a boat is rather minimal in your total negotiation. Yet a lot of people see that statement and hear the word duty and turn away.

 

[healhustler]

It's an old law that probably once had a good intention behind it, but now it's just another layer of confusion that's stacked upon an investment that already produces enough systemic "Duh".

 

[keb]

Thanks Mr. B! So if one was to buy said boat, and brought into FL and paid the FL Use Tax (what is the % with the CAP?) and the 1.5% federal duty, how much of a hassle is it to "import" a boat to the US? Time, hassle, importing agent cost, paperwork, Gvmt BS? Is there a possibility of a bureaucrat putting unreasonable conditions on the import?

Why couldn't one just request the seller import and pay the 1.5% fee as a condition of the sale? It certainly isn't that large of a fee. But if the time is an issue that would delay closing extensively then it certainly could be a negotiating point.

The USE Tax is annual or one time? I know this has been discussed before on TF but looking for a quick refresh w/o spending hours going thru past msgs. Who "normally" pays it, buyer or seller? Say you are buying a $500k boat, the import fee is $7500 and the Use Tax would be _______?

Kevin
From the No Sales/Use tax State of Oregon

 

[BandB]

Thanks Mr. B! So if one was to buy said boat, and brought into FL and paid the FL Use Tax (what is the % with the CAP?) and the 1.5% federal duty, how much of a hassle is it to "import" a boat to the US? Time, hassle, importing agent cost, paperwork, Gvmt BS? Is there a possibility of a bureaucrat putting unreasonable conditions on the import?

Why couldn't one just request the seller import and pay the 1.5% fee as a condition of the sale? It certainly isn't that large of a fee. But if the time is an issue that would delay closing extensively then it certainly could be a negotiating point.

The USE Tax is annual or one time? I know this has been discussed before on TF but looking for a quick refresh w/o spending hours going thru past msgs. Who "normally" pays it, buyer or seller? Say you are buying a $500k boat, the import fee is $7500 and the Use Tax would be _______?

Kevin
From the No Sales/Use tax State of Oregon

Florida use tax is 6% so on $500k would be the $18,000 limit.

If the boat is properly documented in it's flag state then importing it to the US is rather easy. Still you'll want to use someone experienced in doing so and cover all the normal bases such as a thorough title search.

Many reasons for the seller not to bring it in. First, the sale might fall through and they're out that money and effort. Second, they may not be a US citizen and able to document in the US. Third, they may be a US citizen keeping it offshore and just not want to risk any entanglement or questions.

As to a bureaucrat putting unreasonable conditions, that's not going to happen but then what one considers reasonable another may not. Still if you use someone knowledgeable in the area of importing boats, they will make sure you avoid any bureaucratic snafu.

 

[BandB]

Kevin
From the No Sales/Use tax State of Oregon

What about property taxes? There are no property taxes on boats in Florida.

What about income taxes? There are no state income taxes in Florida.

All states have taxes, just some on one thing and some on another.

 

[keb]

What about property taxes? There are no property taxes on boats in Florida.

What about income taxes? There are no state income taxes in Florida.

All states have taxes, just some on one thing and some on another.

There is no sales tax and no use tax on boats. there are property taxes for real property (quite high but varies by county), and personal property taxes on various equipment used in business (typically a county tax), high gas taxes, and the new Arts Tax in Portland to support the arts for every resident - that one has a lot of people mad since the City did an end run around the voters when a ballot measure failed. And yes high Income Taxes 9%+ is one of the main reasons to "get out while you can" attitude of many retiree's and soon to be retiree's. There has always been a desire to go across the river to Vancouver, WA but their real estate prices, rents, and property taxes have caught up with Oregon. I certainly wasn't bragging about Oregon's citizen tax scheme by any means. Boats are favorable but not much else.

Taxes are everywhere and you can't get away from all, but you can certainly get away to somewhere that has less taxes to impact your own personal situation. Thus my questions about FL and what to expect. Don't want to have to many "Doh!" moments when finding our spot.

 

[THD]

B-the issue is not that the import duty exists, it is the timing of collection and the valuation upon which it is collected. Currently, the import duty is assessed on the "FMV" (who determines that and how?) on the vessel at the time it is brought into the US. Thus, simply bringing a boat into the US to be put up for sale triggers the import duty. So, the owner has to pay the duty up front, 1.5% of some artificially determined "value". We all know that that the valuation of any large boat is a crapshoot, and even moreso in the megayacht world. And it is the megayacht world that these brokers want to cater to. So, how does Customs value such a boat to impose the duty? Build cost less some arbitrary depreciation? Listing price? On a yacht listed at $50M, 1.5% is $750,000, not insignificant sum to pay up front, just for the privilege of bringing a boat in to sell. As we all should know, FMV is classically defined as a price agreed to between a willing buyer and a willing seller, neither under any compulsion to enter into the transaction. That is the "value" upon which the import duty should be imposed. A boat listed for $50M, might sell for $35-45M, a loss to the seller of up to $225,000 on the sale. One additional point, if the boat is ultimately sold to a foreign buyer, there would be no duty due if the buyer is leaving US waters. The duty paid on entry will not be refunded to the seller. Thus the seller will have paid the US the $750K for the privilege of parking his boat in the us for as long as it took to sell it. Hardly a fair deal.

I fail to see why legislators are confused as to how to solve this (other than the normal legislator confusion on any issue). Simply amend the law to allow the boat to come into US waters solely for the purpose of the sale and if the boat is sold to a US buyer, mandate reporting and collection of the duty, based on the sale price, by the selling broker. No different than brokers being required to collect sales tax as a part of the sale as they now are. It just ain't that hard to figure out.

 

[BandB]

The basics aren't difficult to figure out, but the details of controlling it and managing it are. How do you issue permits to defer duty as boat is being brought in for the purpose of sale? How do you make sure you collect at time of sale and how do you insure that's really the purpose. There are many boats listed for sale where the owners aren't that serious about selling them.