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Old 03-02-2014, 10:44 PM   #1
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Where to register my boat.. CA or WA

I am getting ready to purchase our first boat. I am planning on splitting time with it between WA and CA. I am planning on sailing/motoring south in the fall and trucking north in the spring. I am unsure of how tax laws work for boats. I did see someone wrote that boats in CA are taxed just like houses. How does the BOE calculate 'property' tax on boats? At what price point or length or whatever does CA start charging property tax? I am not sure but the tax rate on my property is paid to my county, not the state, so something must be different.. ?

What is the sales tax in WA and CA?
What are the registration expenses in WA and CA?
Would I be better keeping my boat in WA 6 months and 1 day (or more) to avoid paying the higher CA tax? How much would I save on an older $100k boat. How much would I save for a newer $200K boat?

I know you heavy hitters out there are all retired accountants, so please help a simpleton like myself understand.

Thanks
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Old 03-02-2014, 10:58 PM   #2
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Greetings,
"I am getting ready to purchase our first boat."



Atta boy Mr. b!
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Old 03-02-2014, 11:13 PM   #3
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Can't speak for WA. For California, it's based on the boat's ownership and location as of Jan. 1. (If you sell on Jan. 2, you owe next year's tax.) Annual property tax varies by county. For instance, in Contra Costa County it is about 1.5% of value, while in across-Carquinez-Strait Solano County it's about 1.1%. Value will be based on the purchase price, which will be depreciated over time. Registration fees are minor, which can be avoided if the boat is USCG documented. Would seem if you "winter" in California, you'll be subject to its taxes. (CA will make that assumption.)

CA sales/use tax varies by county (ranging from about 8 to 10%).
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Old 03-03-2014, 12:42 AM   #4
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Greetings,
"I am getting ready to purchase our first boat."

Atta boy Mr. b!
That's funny.
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Old 03-03-2014, 12:46 AM   #5
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Can't speak for WA. For California, it's based on the boat's ownership and location as of Jan. 1. (If you sell on Jan. 2, you owe next year's tax.) Annual property tax varies by county. For instance, in Contra Costa County it is about 1.5% of value, while in across-Carquinez-Strait Solano County it's about 1.1%. Value will be based on the purchase price, which will be depreciated over time. Registration fees are minor, which can be avoided if the boat is USCG documented. Would seem if you "winter" in California, you'll be subject to its taxes. (CA will make that assumption.)

CA sales/use tax varies by county (ranging from about 8 to 10%).
So if my boat is registered in washington, but i have it berthed in contra costa county over new year's for a month or two, I will owe ca property tax on the boat for the entire year?
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Old 03-03-2014, 01:03 AM   #6
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So if my boat is registered in washington, but i have it berthed in contra costa county over new year's for a month or two, I will owe ca property tax on the boat for the entire year?
If your boat is in CA on Jan. 1 at a marina and a leased berth, you'll probably have a dispute with the state until you can convince it the boat "belongs" to Washington State. In CA, you're guilty of owing taxes until you prove your innocence.

Best to get guidance from the CA Board of Equalization.
http://www.boe.ca.gov/
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Old 03-03-2014, 01:34 AM   #7
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Bligh-I take it from your info that you are a resident of Ca. You would be better off registering it in Ca. In WA, you can bring your boat in for up to 60 days without doing anything. Before the end of the 60 days, you can apply for a permit for another 60 days. That permit can be extended for an additional 60 days. So, you would have 180 days total. However, you must remove the boat form WA before the expiration of the certificate. If not, you will be hit with sales tax and be required to register it in WA.

I see not reason you could not do that again each year.
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Old 03-03-2014, 02:34 AM   #8
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I'm assuming also you're a California resident. How many months a year do you expect to use the boat in each state?

You're dealing with a rather complex situation if you intend to use it nearly equally or even several months per year in each state.

It starts with sales tax and where you purchase the boat. You can get exemption from that state's but then you're responsible for the other. However, if you purchase it in one state, decide to take it and register it in the other, there are some limitations on returning with it to the unpaid state. As an example if you purchased in Washington, took it to CA and registered there, it can require a use permit for WA and once that is used may limit you returning to WA for a period of time. And the rules are different based on size.

California's issue is similar. Let's say you purchase in CA and intend to take it to WA and register there. If you stop and make any recreational use of the boat in CA then it's subject to use tax.

In WA most boats are subject to an excise tax whereas it's a property tax in CA. The excise tax is generally half or less of the property tax. Now it was mentioned not having it in CA on January 1. This does apply for a sale. If you purchased it and brought it in on Jan 2 then you wouldn't pay until the following year. However, if you're a resident in CA and keep it in CA a substantial part of the time, CA goes by habitual place of mooring. That is if the boat is normally or often moored in CA and you live in CA then it's going to be subject to property tax in CA regardless of where it is on Jan 1. That only changes when it becomes permanently situated in another state.

If it's principally used in CA it must be registered there. WA would then not require registration for a non resident if you got permits as described above which allow its use in WA up to six months of any consecutive 12 months. Note it's not of a year. But if you used it five months, then one month three months later, you couldn't return without registering for until 12 months passed starting with the first month you used it there. Then you could go another five, but not six, until it had been a year since that single month a year ago.

It's all terribly complex and I think the two key questions are where do you reside and where will the boat be a majority of the time. But if you reside in CA and the boat is docked in CA a significant amount of time even if under 6 months a year and even if not on Jan 1, CA is going to expect you to pay property taxes and it would be very difficult for you to argue against them. If you only brought it to CA one month a year, perhaps, but not with split use.

Regardless one or the other state is going to get you in all areas. And if you try to get two creative both will come after use tax or property/excise taxes or say you need to register it.

Don't start down the path of trying to create the scenario with the least taxes. Any action taken strictly to try to avoid a tax can easily backfire. Think about what you really want to do. If that is you live in CA and want to use it there most of the time, then pay sales tax or use tax there, register it there, and pay property taxes there. Then look carefully at the regulations of other states if you purchase it in one and/or you intend to spend a lot of time in one.

Good luck with enjoying the entire west coast and any other areas you cruise to.
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Old 03-03-2014, 02:37 AM   #9
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Bligh-I take it from your info that you are a resident of Ca. You would be better off registering it in Ca. In WA, you can bring your boat in for up to 60 days without doing anything. Before the end of the 60 days, you can apply for a permit for another 60 days. That permit can be extended for an additional 60 days. So, you would have 180 days total. However, you must remove the boat form WA before the expiration of the certificate. If not, you will be hit with sales tax and be required to register it in WA.

I see not reason you could not do that again each year.
He can actually purchase an ID card from the Washington department of licensing in the first 60 days of use there that will allow use 6 months of a consecutive 12. This is not the one time card which then has to be extended.
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Old 03-03-2014, 08:53 AM   #10
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So if my boat is registered in washington, but i have it berthed in contra costa county over new year's for a month or two, I will owe ca property tax on the boat for the entire year?
bligh, I suggest you contact the tax authorities in both states and pose your question to them. Advice you get on a web forum is suspect and worth exactly what you pay for it.

If one state feels the boat should be registered and taxed in their state but you've done it in another state based on advice from a boating forum, you will be in big "do-do". You will have back taxes and fines to pay.

I have dealt with the taxing office in my county and they were very helpful and even suggested how I could lower my tax rate.
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Old 03-03-2014, 08:57 AM   #11
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Greetings,
Whatever information you get from various tax offices GET IT IN WRITING!!!!
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Old 03-03-2014, 09:15 AM   #12
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Greetings,
Whatever information you get from various tax offices GET IT IN WRITING!!!!

Good luck with that... see attached photo of the tax departments.. same chumps in either state!

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Old 03-03-2014, 09:57 AM   #13
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Greetings,
Whatever information you get from various tax offices GET IT IN WRITING!!!!
Of course. And if they seem to disagree, you can send each state's response to the other until it can be figured out.

I've said many times, if it's not in writing, it didn't happen.
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Old 03-03-2014, 11:52 AM   #14
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I tend to agree with Mark I think it was, if you live in California and plan to use it over the winter months in California then pay California's sales tax and personal property tax. You don't actually "register" it in California, you just pay their taxes. Registration is a separate issue and if you federally document it you do not have to register.

But as someone else says, if your residence is in California they will hound you till the ends of the earth unless you prove that it has never been in California. Otherwise, pay the California tax man.

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Old 03-03-2014, 02:45 PM   #15
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The OP asked what are the tax rates in Washington State.

Sales tax is from a bit less than 9% to a bit over 9% depending on what county the purchase was made. King county where Seattle is, has the highest rate in the state.

The state charges an annual excise tax on boats, whether documented or not, based on its current value of 1/2% due in June. Sounds like this is a lot less than CA charges.
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Old 03-03-2014, 02:58 PM   #16
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You could always keep it in BC instead of WA. Many Americans do. There are a few on this forum.
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Old 03-03-2014, 03:16 PM   #17
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None of us wants to pay higher taxes than we have to but keeping the boat far from home to reduce the tax burden may not be worth in by the time you spend time and money getting to the boat.

There are very few legal tax dodges available to most of us when it comes to boats. In most states, the tax is due where you keep or use the boat. Moving it out of state for a day or two doesn't relieve you of tax liability. Often you can reduce the tax rate by claiming your boat as a second home.
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Old 03-03-2014, 03:26 PM   #18
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Here's a lawful dodge to the sales tax in WA....before you buy the boat have the current owner create an LLC and title the boat in the name of the LLC. It will cost him a couple hundred bucks but you can reimburse him for that.

Then, when you make your purchase you are buying the LLC, and the assets owned by the LLC (principally the boat) come with it without being taxed separately.

You would still have to license the boat each year, and that ain't real cheap, but at least you don't pay the sales tax.

Doing the LLC thing is the same as if the LLC owned office furniture, trucks, etc. They pass to the new owners without being taxed separately.
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Old 03-03-2014, 03:58 PM   #19
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Like someone else had mentioned, in California it's a personal property tax, not a real estate property tax. By the way you also pay this same personal property tax every year on your auto. If you look at your car's registration, the actual registration is only $45 or so a year, the vast majority of the balance is personal property tax on the car you own.
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Old 03-03-2014, 04:32 PM   #20
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Angry

tennessee is much simpler, they want sales tax no matter where you buy it
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