Reply
 
Thread Tools Search this Thread Display Modes
 
Old 07-18-2017, 08:00 AM   #1
Member
 
City: Dallas
Country: USA
Join Date: Jul 2017
Posts: 23
Tax implications

When purchasing a vessel with a price tag north of a few 100k, are there 'strategies' that can be used to avoid certain taxes?

I presume that buying in a state with no sales tax is one way, but what happens when you go back to your home state and register the vessel? Surely you'll get hit with use or personal property tax?

Also as an example, lets say my boat is registered in TX and we spend a good chuck of a year in FL. Will FL try to hit us with some sort of tax?

Thanks for the help!
__________________
Advertisement

FutureLooper is offline   Reply With Quote
Old 07-18-2017, 08:08 AM   #2
Guru
 
City: North Charleston, SC
Country: USA
Join Date: Sep 2010
Posts: 4,385
You will pay the taxes. Some states have lower tax rates than others but do you want to boat where the boating is good or where the tax rate is low?


If you can afford the boat, you can afford the taxes.


And yes, registering the boat in TX and using it in FL will not get you out of paying taxes in FL.
__________________

rwidman is offline   Reply With Quote
Old 07-18-2017, 08:11 AM   #3
TF Site Team
 
Bay Pelican's Avatar
 
City: Chicago, IL
Country: USA
Vessel Name: Bay Pelican
Vessel Model: Krogen 42
Join Date: Oct 2007
Posts: 2,994
The state in which you register the boat will have the first crack at the sales (sic) or use taxes. Then there are certain states if you stay longer than 30/60/90 days will charge you use tax at their rate but give you credit for taxes you have already paid.

Florida will let you off the hook if you have kept the boat our of Florida for 90/180 days(?) and did not indicate a plan to bring the boat to Florida initially.
__________________
Marty
Bay Pelican is offline   Reply With Quote
Old 07-18-2017, 08:12 AM   #4
Member
 
City: Dallas
Country: USA
Join Date: Jul 2017
Posts: 23
Well, we hope to boat all over; Great loop then who knows where. So if buying a boat in one state saves taxes, why not take advantage of that?

Regarding the FL tax, when does that kick in? If we are TX residents and our boat is registered in TX, is there a time period we have to be in FL before they try to tax us? Out of curiosity, how would FL even know how long we were there?
FutureLooper is offline   Reply With Quote
Old 07-18-2017, 08:24 AM   #5
Senior Member
 
City: Tampa, FL
Country: USA
Join Date: Nov 2013
Posts: 394
If you are in Florida for more than 90 days then you are required to register the boat. When you do that, if you have not owned and used the boat in another state for at least six months, then you may owe use tax. You will get a credit for any tax paid in another state. Florida caps their sales/use tax at $18k.

As to "how will they know?" Well, there are some jurisdictions where they have people walking the docks looking for violators. If you are wondering if it is possible for you to break the law, of course the answer is "yes." There are people who do it all the time. Some of them get caught, some of them don't (though, if you make a habit of it, the odds of eventually getting caught are pretty good).
denverd0n is offline   Reply With Quote
Old 07-18-2017, 08:28 AM   #6
Member
 
City: Dallas
Country: USA
Join Date: Jul 2017
Posts: 23
I'm not a lawbreaker, was just curious how they would find out. Never saw such a thing on Lake Erie.

Also, I am formally renouncing my intent to do the great loop. Specifically, stopping in FL.
FutureLooper is offline   Reply With Quote
Old 07-18-2017, 08:31 AM   #7
Guru
 
Group9's Avatar
 
City: Bay Saint Louis, Mississippi, (or where the anchor drops)
Country: USA
Vessel Model: 1973 42 Bertram MY
Join Date: Sep 2013
Posts: 570
There are people whose job it is to help you pay the lowest possible taxes. They call themselves "CPA's".
__________________
Living life at one quarter speed.
Group9 is offline   Reply With Quote
Old 07-18-2017, 08:40 AM   #8
Member
 
City: Dallas
Country: USA
Join Date: Jul 2017
Posts: 23
I think this will require a maritime tax attorney and a cpa.
FutureLooper is offline   Reply With Quote
Old 07-18-2017, 09:11 AM   #9
Guru
 
djmarchand's Avatar
 
City: Litchfield, Ct/Punta Gorda, Fl
Country: USA
Vessel Model: Atlas Pompano 23- outboard
Join Date: Aug 2012
Posts: 4,329
It can be done and I did it.

Buy a boat and don't worry about what state you buy it in. Almost all states do not require registration and payment of sales tax if you certify that you will remove it from that state in x days, usually 90.

Then federally document the boat for title purposes.

Then start your cruising plans. As long as you don't stay in any one state more than 90 days you will not be required to register there or pay their use taxes.

As best as I can tell, it is entirely legal to do this.

David
djmarchand is offline   Reply With Quote
Old 07-18-2017, 09:13 AM   #10
Senior Member
 
City: Houston
Country: USA
Join Date: May 2017
Posts: 316
If a Texas boat spent, say, 80 days in FL, then made a side trip to the Bahamas with the associated documentation, and returned to FL, would the clock start over?
CDreamer is offline   Reply With Quote
Old 07-18-2017, 09:53 AM   #11
Guru
 
City: North Charleston, SC
Country: USA
Join Date: Sep 2010
Posts: 4,385
Quote:
Originally Posted by CDreamer View Post
If a Texas boat spent, say, 80 days in FL, then made a side trip to the Bahamas with the associated documentation, and returned to FL, would the clock start over?
No.

One of the common and recurring themes on this and other boating forums is "how to avoid taxes on boats". Basically, it's almost impossible to pull it off legally. I suppose if you cruise constantly and never stay in one state more than that state's time limit, you could, but do you want to be a slave to avoiding taxes or did you buy a boat to enjoy it?

To answer your question, most states tax you if you stay in their state more than X number of days per calendar year. You can't just make an overnight trip to another state or country and return.

For accurate information, you can't rely on a web forum, you need to contact each state's authorities and ask them about taxes.


BTW: Federal documentation does not relieve you of sales or personal property tax in any state. In some states, it relieves you of registration fees but not taxes.
rwidman is offline   Reply With Quote
Old 07-18-2017, 10:16 AM   #12
Member
 
City: Dallas
Country: USA
Join Date: Jul 2017
Posts: 23
If i'm reading that right an owner would pay sales tax upon initial purchase, and then use/personal tax for each state in which he spends more than the state's allotted time?

Sounds like a never ending tax burden if you want to visit the country via water.
FutureLooper is offline   Reply With Quote
Old 07-18-2017, 10:20 AM   #13
Guru
 
City: North Charleston, SC
Country: USA
Join Date: Sep 2010
Posts: 4,385
Quote:
Originally Posted by FutureLooper View Post
If i'm reading that right an owner would pay sales tax upon initial purchase, and then use/personal tax for each state in which he spends more than the state's allotted time?

Sounds like a never ending tax burden if you want to visit the country via water.
It's no different than doing it by car or RV. Spend a week or a month and you're visiting. Spend three months and you're living there.
rwidman is offline   Reply With Quote
Old 07-18-2017, 10:20 AM   #14
Guru
 
dhays's Avatar
 
City: Gig Harbor
Country: United States
Vessel Name: Kinship
Vessel Model: North Pacific 43
Join Date: May 2015
Posts: 7,271
Quote:
Originally Posted by FutureLooper View Post
If i'm reading that right an owner would pay sales tax upon initial purchase, and then use/personal tax for each state in which he spends more than the state's allotted time?

Sounds like a never ending tax burden if you want to visit the country via water.

Every state is different. However, in WA if you can show that you paid sales tax on the boat previously, you don't have to pay the sales tax again. There are some time requirements involved but the point is you don't get taxed indefinitely. However, you would have to register the boat in WA if you stay over a given number of days. In WA, you pay an excise tax with your registration. This happens yearly whether your boat is documented or not.
__________________
Regards,

Dave
SPOT page
dhays is offline   Reply With Quote
Old 07-18-2017, 10:25 AM   #15
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 16,130
Quote:
Originally Posted by FutureLooper View Post
When purchasing a vessel with a price tag north of a few 100k, are there 'strategies' that can be used to avoid certain taxes?

I presume that buying in a state with no sales tax is one way, but what happens when you go back to your home state and register the vessel? Surely you'll get hit with use or personal property tax?

Also as an example, lets say my boat is registered in TX and we spend a good chuck of a year in FL. Will FL try to hit us with some sort of tax?

Thanks for the help!
The best advisors in this area are the boat Documentation services. They're aware of all the ins and outs.

Every state is different and sometimes the laws of adjacent states may conflict and could lead to the worst of both worlds hitting you.

Initially you have the issue of sales and use tax. That's based on where you purchase, how long you'll have the boat there, where you'll be taking it, and where you reside. While sales tax varies, the likelihood of totally escaping it is slim unless you both live in and intend to keep the boat in a state with no sales tax.

Registration is generally not expensive, but it often is what sets sales and use tax in motion. Once they have been paid, you may even find yourself needing to register in more than one state as you use the boat, but the registration cost is mild, just the other taxes it can lead to.

Property tax is assessed annually on the boat, based on where it physically is but with some caveats. Another state may claim they're the state of principal use. Each state has different rules.

In the case of Florida, they have a fairly high sales tax but limited to $18,000 which comes into play on $300k boats or so. Florida, however, has no property tax on boats so ultimately is among the lower cost places to keep your boat.
BandB is offline   Reply With Quote
Old 07-18-2017, 10:33 AM   #16
Guru
 
City: North Charleston, SC
Country: USA
Join Date: Sep 2010
Posts: 4,385
By contrast, SC caps the sales tax at $300 but there's a personal property tax based on the boat's estimated value every year.


There's a private citizen in my area who makes it his business (it is not his business) to ride around in his personal boat and make note of any expensive looking boats in the area and making sure that the county is charging the owners personal property tax on the boats. He turned in a large yacht one year and the tax bill was just under $300K. That's the tax on the boat for one year!
rwidman is offline   Reply With Quote
Old 07-18-2017, 10:34 AM   #17
Guru
 
djmarchand's Avatar
 
City: Litchfield, Ct/Punta Gorda, Fl
Country: USA
Vessel Model: Atlas Pompano 23- outboard
Join Date: Aug 2012
Posts: 4,329
Quote:
Originally Posted by FutureLooper View Post
If i'm reading that right an owner would pay sales tax upon initial purchase, and then use/personal tax for each state in which he spends more than the state's allotted time?

Sounds like a never ending tax burden if you want to visit the country via water.
Not so.

In every state if you are liable for their use tax because you stayed there long enough, you get a credit for sales/use tax paid to other states.

Also for states with a personal property tax, that tax is due if you were in their state on January 1 and stayed beyond the statutory limit. So it would be very difficult to be taxed twice for personal property.

But if you are a continuous cruiser like a looper, reread my post above.

David
djmarchand is offline   Reply With Quote
Old 07-18-2017, 10:56 AM   #18
Guru
 
City: North Charleston, SC
Country: USA
Join Date: Sep 2010
Posts: 4,385
Quote:
Originally Posted by djmarchand View Post
............

Also for states with a personal property tax, that tax is due if you were in their state on January 1 and stayed beyond the statutory limit. .........
You don't have to be there on January 1 to be liable for the tax.
rwidman is offline   Reply With Quote
Old 07-18-2017, 11:00 AM   #19
Guru
 
BandB's Avatar
 
City: Fort Lauderdale
Country: USA
Join Date: Jan 2014
Posts: 16,130
Quote:
Originally Posted by WesK View Post
You don't have to be there on January 1 to be liable for the tax.
No, and being somewhere on January 1 does not absolutely make you liable. It may lead to you being charged but if you're not liable you can get that charge reversed. We knew we were going to be in California on January 1 and that they did very carefully walk though the marina. However, we got with the tax office in San Diego in advance and provided all the evidence that California was not our principal place of use and we were just passing through on our way to Florida. No tax.
BandB is offline   Reply With Quote
Old 07-18-2017, 11:01 AM   #20
GFC
Guru
 
GFC's Avatar
 
City: Tri Cities, WA
Country: USA
Vessel Name: Beachcomber
Vessel Model: Sea Ray 550 Sedan Bridge
Join Date: Nov 2012
Posts: 3,374
Here's another thought: If you're buying the boat from a private owner, have the owner form an LLC (you pay the costs) and then title the boat in the name of the LLC. Then, instead of you buying a boat you're buying a company (the LLC).


The reason for this is that when an LLC sells, and the assets of the LLC go with it there is no sales tax. This is most often done when a business sells and the cars and trucks that are owned buy the business go with the LLC at time of sale.


No different with a boat. Now, as a caveat, the gubmint will look somewhat askance at your transaction but you often see this done on larger boats.
__________________

__________________
Mike and Tina
Beachcomber 1995 Sea Ray 550 Sedan Bridge
GFC is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off





All times are GMT -5. The time now is 03:18 PM.


Powered by vBulletin® Version 3.8.8 Beta 4
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0
Copyright 2006 - 2012