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Old 03-13-2012, 07:32 AM   #1
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Question for Maryland Boaters?

We live in Delaware (no tax) and just bought a boat in NC (no tax).* The boat is Coast Guard documented and we plan to keep it for the next year in the Chesapeake Bay in MD.* Is it true we have to register it there and pay a 5% excise tax to the state of MD?
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Old 03-13-2012, 08:06 AM   #2
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Question for Maryland Boaters?

Yes, it is true.

*

I don't know about registering it, but you do have to pay the tax.* Coast Guard documentation makes no difference for tax purposes.* Neither does the fact that you claim residence in DE.


-- Edited by rwidman on Tuesday 13th of March 2012 08:07:52 AM
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Old 03-13-2012, 08:31 AM   #3
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RE: Question for Maryland Boaters?

ouch!
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Old 03-13-2012, 11:48 AM   #4
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RE: Question for Maryland Boaters?

Is that a recurring*annual tax or a one-time tax on the sale price due to the purchase?
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Old 03-13-2012, 11:56 AM   #5
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RE: Question for Maryland Boaters?

Quote:
FlyWright wrote:
Is that a recurring*annual tax or a one-time tax on the sale price due to the purchase?

A one time sales (or use) tax.* It's not recurring like personal property taxes in some states.
*
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Old 03-13-2012, 11:58 AM   #6
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RE: Question for Maryland Boaters?

http://www.dnr.state.md.us/boating/registration/

Quote:
How do I know if my vessel must be registered in Maryland?
Your vessel, whether commercial or recreational, must be registered in Maryland if it is:


Equipped with any kind of primary or auxiliary mechanical propulsion; and
Used in Maryland most in a calendar year.

Note: US Coast Guard documented vessels using Maryland waters are NOT exempt from the vessel excise tax. When used principally in Maryland, documented vessels must display a documented use decal.

If your vessel was purchased in Maryland and will use Maryland waters a majority of the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of purchase to avoid assessment of penalty and interest.

If your vessel was purchased elsewhere or previously registered in another jurisdiction, is now in Maryland waters, and will use Maryland waters more than any other single jurisdiction during the calendar year, you are liable for vessel excise tax and must register the vessel within 30 days of entering Maryland waters.

If your vessel is duly registered in another jurisdiction but remains in Maryland waters more than 90 days in a calendar year, you may be liable for vessel excise tax unless you can prove principal use in another jurisdiction.

What is "principal use?"
8-701(p) of the State Boat Act

State of principal use means the jurisdiction on whose waters a vessel is used or to be used most during a calendar year, which is the period from January 1 through December 31.

Use means to operate, navigate, or employ a vessel. A vessel is in use whenever it is upon the water, whether it is moving, anchored, or tied up to any manner of dock or buoy. A vessel is also in use if it is kept in any structure in readiness for use.

When must I apply?
Vessel excise tax must be paid within 30 days of Maryland tax liability to avoid the assessment of penalty (10% of vessel excise tax due) and interest (1.5% per month).

Vessel in Disrepair at time of Purchase

If you are given a boat because it is no longer operational or is in very poor condition, or the purchase price is much lower than fair market value because of the boats current condition, be sure to title the boat in your name within 30 days of purchase. Refer to the What documents will I need? section on this webpage to ensure you have all of the required documents. The certified bill of sale should detail the condition of the boat and list the items that are not operational on the vessel. Photographs of the poor vessel condition may be required to confirm a much lower Fair Market Value. If you wait to title until work on the vessel is completed, vessel excise tax will be assessed against the higher value of the restored boat.
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Old 03-13-2012, 11:59 AM   #7
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Question for Maryland Boaters?

So if the boat was moved to Delaware for a period immediately after the sale, the tax could be avoided?

Crossed posts


-- Edited by FlyWright on Tuesday 13th of March 2012 12:05:09 PM
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Old 03-13-2012, 12:37 PM   #8
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RE: Question for Maryland Boaters?

Quote:
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So if the boat was moved to Delaware for a period immediately after the sale, the tax could be avoided?

Crossed posts



-- Edited by FlyWright on Tuesday 13th of March 2012 12:05:09 PM

Only if it stays in Deleware.* There plenty of people trying to avoid state taxes on boats by various schemes.* The states are wise to these efforts.*

If you want to keep or use the boat primarilly in MD, you will have to pay the tax.** Read the information from the MD DNR site again.
*
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Old 03-13-2012, 01:20 PM   #9
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RE: Question for Maryland Boaters?

We posted essentially at the same time.* I edited to denote the crossed posts.* Thanks for the info.
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Old 03-13-2012, 02:40 PM   #10
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RE: Question for Maryland Boaters?

Quote:
FlyWright wrote:
We posted essentially at the same time.* I edited to denote the crossed posts.* Thanks for the info.

Understood.* You're welcome.

I don't think you're trying to cheat MD or anything but I've read so many schemes posted by other on how they plan t avoid taxes in this state or that.

I spent the first 61 yeard of my life as a MD resident.* A former co-worker of mine left to take a job with the MD DNR with his principal duty being to visit marinas and private docks looking for out of state boats exceeding the allowed time to be in MD.* It's the same with cars and trucks - after so many days in the state, they must be registered and taxes and fees paid.

In SC, the sales tax on a boat purchased is capped at $300 but there is a personal property tax levied on boats that is paid every year.* In the long run, the upfront sales tax is probably a better deal.*
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Old 03-14-2012, 01:04 PM   #11
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Question for Maryland Boaters?

rwidman wrote:

A one time sales (or use) tax. It's not recurring like personal property taxes in some states.

Don't want to sound picky, but I'm in the process of doing my taxes and trying to figure out how to handle the 5% excise tax I paid in MD last year. Everything I can find states that an excise tax is not a sales or use tax, it is, essentially, an "import" tax and I can't find the appropriate way of handling this on my Fed tax return. What have other people done?

Thanks,

dvd


-- Edited by dvd on Wednesday 14th of March 2012 01:04:46 PM
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Old 03-14-2012, 02:01 PM   #12
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RE: Question for Maryland Boaters?

Quote:
dvd wrote:
Don't want to sound picky, but I'm in the process of doing my taxes and trying to figure out how to handle the 5% excise tax I paid in MD last year. Everything I can find states that an excise tax is not a sales or use tax, it is, essentially, an "import" tax and I can't find the appropriate way of handling this on my Fed tax return. What have other people done?
*Eat it.
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Old 03-14-2012, 02:51 PM   #13
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RE: Question for Maryland Boaters?

How about those Maryland crab. Eat those too.
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Old 03-14-2012, 02:57 PM   #14
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RE: Question for Maryland Boaters?

I have no problem paying my fair share of taxes - proud to do it and proud to be able to do it. But, if there's a legal deduction for taxes paid to a state where I am not a resident, it would be silly of me not to take advantage of it.

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Old 03-14-2012, 03:09 PM   #15
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RE: Question for Maryland Boaters?

With the taxes we are all forced to pay I would be proud to take advantage of any and all deductions.

Glad to say in Alaska I don't pay any state* tax on my boat.

Documented hull.

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Old 03-14-2012, 03:33 PM   #16
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RE: Question for Maryland Boaters?

This will probably not make you happy either. It is not in effect but probably will go through.
The current boat registration fee in Maryland is $24 for two years, with exemptions for sail and human-powered-only vessels along with all vessels less than 16 feet and powered by less than 7 hp. Set in 1983, this fee adjusted for inflation would now be approximately $54 for two years.

House Bill 1307 proposes the following boat registration fee increases:
Boat Length Current***** 2012*********** 2014
<16' , <7.5hp*******$0***** $25************ $50
<16' , >7.5hp**** $24****** $25*********** *$50
16' to <32'****** * $24******* $75************ $75
32' to <45'********* $24***** $125******* ** $250
45' to <65'******** *$24********$250******** $500
65'+*********************$24******* $350****** *$700

(In addition, unpowered sailboats greater than 16' would be subject to registration requirements and fees.)

In comparison, a 21' boat costs $20-56 for 2 years registration in VA, DE, PA, NJ or NC.
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Old 03-14-2012, 04:41 PM   #17
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Question for Maryland Boaters?

Quote:
dvd wrote:
rwidman wrote:

A one time sales (or use) tax. It's not recurring like personal property taxes in some states.

Don't want to sound picky, but I'm in the process of doing my taxes and trying to figure out how to handle the 5% excise tax I paid in MD last year. Everything I can find states that an excise tax is not a sales or use tax, it is, essentially, an "import" tax and I can't find the appropriate way of handling this on my Fed tax return. What have other people done?

What have I done?

Many years ago, I decided that it would be to my advantage to employ a professional tax preparer to figure my income taxes.*

The pros know the answers to this and other questions.* I figure I save more than I pay the person and it takes a lot of stress off me at tax time.
*


-- Edited by rwidman on Wednesday 14th of March 2012 04:41:50 PM
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Old 03-14-2012, 07:16 PM   #18
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RE: Question for Maryland Boaters?

Used to have an expert in the family to check over my returns. My father-in-law was with the IRS for over 30 years, then prepared client tax returns every year for another 20 years. Unfortunately he died a couple of weeks ago (not unexpected - he lived a good, long life), otherwise I would have called him.

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Old 03-15-2012, 08:45 PM   #19
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RE: Question for Maryland Boaters?

Well I guess we will have to pay it but I can sure think of some nice upgrades to the new boat I could buy with that $5,000. As I said before... ouch
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Old 03-16-2012, 06:00 AM   #20
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RE: Question for Maryland Boaters?

yikes!
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