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04-12-2019, 10:34 PM
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#1
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Veteran Member
City: Western Suburbs of Chicago
Vessel Name: Kimberly Dawn
Vessel Model: 1984 Marine Trader 40 Sundeck Trawlet
Join Date: Dec 2018
Posts: 85
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USCG Documentation vs. State Registration
After more than a year searching and researching, I think I'm finally close to making an offer an negotiating to purchase a 40 trawler -- one step closer to starting my Great Loop adventure ;-)
My three previous boats -- all trailerable 17' - 24.5' -- were all registered in whatever state I happened to reside in at the time (IN, WI, MO, or IL) -- not only because I lived in and file state income tax returns in that state, but also because I kept the boat on the trailer and used the boat primarily in that state (excluding "vacation" trips with the boat in tow to NC, MI, TN/KY, etc.).
Can anyone tell me the pros and cons of documenting my new 40' trawler through the US Coast Guard versus registering it in IL where I live or in WI or IN where I'm more likely to keep the boat and call "home port?" What's the advantage(s) and/or disadvantage(s) of having the boat federally USCG-documented versus state-registered?
WI, IL, and IN all have state sales/use tax rates within 1% - 1.5% of each other, so my question has little or nothing to do with trying to avoid sales/use tax. However, I DO have a state sales/use tax question: If I purchase the boat from an individual (through their yachtworld.com listing agent/broker) in GA as an out-of-state buyer, will I be expected to pay the 7% state/local sales tax there or not until I finally bring the boat back to either WI, IL, or IN (and then pay that state's 5.5%, or 6.5% or 7% sales/use tax, respectively)?
Thank you all in advance for sharing your knowledge and experience on this matter.
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04-12-2019, 11:06 PM
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#2
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Moderator Emeritus
City: Au Gres, MI
Vessel Name: Black Dog
Vessel Model: Formula 41PC
Join Date: Jul 2015
Posts: 21,131
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If you are going to have a loan on the boat the mortgage company will most likely require you to document the boat. It gives them a stronger position if you don’t make the payments. If you are planning on going out of the country with the boat documentation is probably better. As to the tax implications everyone will tell you something different. Our boat is documented but we still have to register it here in Michigan primarily because the state wants the sales tax and the registration fees.
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04-13-2019, 05:49 AM
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#3
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TF Site Team
City: Seneca Lake NY
Vessel Name: Bacchus
Vessel Model: MS 34 HT Trawler
Join Date: Nov 2014
Posts: 7,808
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I can't be sure about those states but will say in general, my experience buying out of state no sales tax collected until the boat or vehicle returned to my home state (NY) and was regustered.
Above is exactly what happened w Documented boat bought in TX via private sale. I applied for Doc name & owner change and had to register in NY to get the reg decal but they do not issue NY Reg #s... they do collect sales tax.
I had to have a Bill of Sale and Title (signed over Fed Doc form)
Advantage... already mentioned- more secure, may be reqd for loan. No need to display state reg #s on hull
Disadvantage... takes time and more paperwork + more $, need to add Doc # placard if not already documented and in place... usually in Eng Rm.
__________________
Don
2008 MS 34 HT Trawler
"Bacchus"
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04-13-2019, 09:57 AM
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#4
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Guru
City: Full Time Cruising East Coast
Vessel Name: Meridian
Vessel Model: Krogen-42
Join Date: Aug 2011
Posts: 1,014
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There is no sales tax on used boats in GA.
__________________
-------------------------
Terry
Meridian
KK-42097
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04-13-2019, 10:08 AM
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#5
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Guru
City: Seattle, WA
Vessel Name: Pau Hana
Vessel Model: 1989 PT52 Overseas Yachtfisher
Join Date: Aug 2012
Posts: 2,676
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Being documented brings the protection of being a US flagged vessel, and is inexpensive. You’re doing the loop, and will be in foreign waters...and may decide to head to the Bahamas during the southern part of the loop.
Get it documented.
__________________
Peter- Marine Insurance Guru at Novamar Insurance Group (206-350-5051) & tuna fishing addict!
1989 52' PT Overseas yachtfisher
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04-13-2019, 11:11 AM
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#6
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Guru
City: Seattle
Vessel Name: AZZURRA
Vessel Model: Ocean Alexander 54
Join Date: Aug 2017
Posts: 4,281
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This most likely doesn’t apply to you but I bring it up so others check before they buy. California May be the only state in the union that does this but they do it. If you buy a California registered boat you will pay Sales Tax, even if you are an out of state buyer who is taking possession of the boat out of state. There are some strange exemptions and there are many transactions the state hasn’t pursued but the bigger the $’s the more aggressive the state is.
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04-13-2019, 02:09 PM
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#7
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Guru
City: Long island
Vessel Model: Eastern
Join Date: Aug 2018
Posts: 632
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It’s about $92.00 to document your boat. Money well spent. You must check with the tax laws of the state you are buying the boat in. Some want it, some don’t
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04-14-2019, 05:12 PM
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#8
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Veteran Member
City: Western Suburbs of Chicago
Vessel Name: Kimberly Dawn
Vessel Model: 1984 Marine Trader 40 Sundeck Trawlet
Join Date: Dec 2018
Posts: 85
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Thanks to all of you who responded. I have one additional question:
If I put the boat in a marina in WI or in IN (rather than in IL), will I pay WI (or IN) sales/use tax, or, because I am an IL resident, IL sales/use tax? The difference between the three states is only 1% +/- .5%...
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04-14-2019, 05:30 PM
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#9
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Senior Member
City: Merced CA
Vessel Name: none
Vessel Model: pipe dream
Join Date: Jul 2014
Posts: 189
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one additional thought: be careful whom you invite aboard if you document. My understanding is that if a guest happens to bring a federal illegal drug, like marijuana, and it is found during a Coast Guard search, your vessel can be confiscated but you still owe the bank. My boat is documented but I don't allow anything illegal aboard.
__________________
Dawdler
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04-14-2019, 06:46 PM
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#10
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Guru
City: Gooding ID/Wrangell AK
Vessel Name: Silver Bay
Vessel Model: Nordic Tug 42-002
Join Date: Sep 2012
Posts: 1,040
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Starting in January this year ALASKA requires state registration whether you are documented or not. Sales taxes weren’t the reason. The State thinks it will help track down owners of abandoned boats.
Tom
Tom
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04-15-2019, 08:43 AM
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#11
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Guru
City: Tampa, FL
Join Date: Nov 2013
Posts: 670
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Quote:
Originally Posted by Boilermaker75
If I put the boat in a marina in WI or in IN (rather than in IL), will I pay WI (or IN) sales/use tax, or, because I am an IL resident, IL sales/use tax?
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Sales tax, and requirements to register, very rarely have anything to do with YOUR state of residence. They have to do with where the boat is bought/sold, and/or where the boat is kept.
I do not know the specific laws in WI or IN, but even if I did I would suggest that you should verify them for yourself. If they are similar to most of the states that I am familiar with then keeping the boat in (for example) WI would mean that you must register the boat in WI. And when you register it there, if you have not paid sales tax elsewhere, then you will have to pay sales (use) tax to WI.
Generally speaking, this sort of thing has nothing to do with whether or not you document the boat with the CG. There are exceptions, but most states will require you to register your boat with them if you keep it there, regardless of CG documentation. If it is documented, however, you will NOT display state registration numbers on the boat.
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04-15-2019, 09:50 AM
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#12
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Guru
City: Chicago/Montrose Harbor
Vessel Name: Sea Jay
Vessel Model: Non Trawler ;-) Ask me if it matters LOL
Join Date: Jun 2016
Posts: 512
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They will each independently wantvtheir sales tax- register where it will live. I bought my boat in WI - registered and paid the sales taxes in Illinois as I knew I would bring her down here the next season. For these states- (others may be different) you have to register even if you are documented. It’s not big of a deal money wise either
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04-15-2019, 10:12 AM
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#13
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Veteran Member
City: Western Suburbs of Chicago
Vessel Name: Kimberly Dawn
Vessel Model: 1984 Marine Trader 40 Sundeck Trawlet
Join Date: Dec 2018
Posts: 85
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Once again, a hearty and grateful THANK YOU to all who replied and shared their knowledge, experience, and advice with me on this matter -- I greatly appreciate you all.
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04-15-2019, 12:08 PM
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#14
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TF Site Team
City: Westerly, RI
Vessel Name: N/A
Vessel Model: 1999 Mainship 350 Trawler
Join Date: Jan 2014
Posts: 4,154
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Being documented serves two purposes:
1) The USCG titles the vessel. The requirement for documentation for a vessel with a boat loan, largely applies to boats registered in states which do not issue titles for boats (not all states issue titles).
2) Travelling internationally.
NOTE: Canada, Bahamas may not require a US vessel be documented, but most other countries do.
If you don't plan on international travel, and are NOT required to title the vessel, there is little need to document it.
Registration requirements are by state and has nothing to do with the state you reside in. Each state varies. Unlike an Auotmobile, you may find you will need to register in multiple states if you remain in that state beyond the time limit. Some states limit time by the year, others by the amount of time spent in a single visit.
Taxes is another discussion completely and has to do with the state the vessel is registered in.
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04-15-2019, 12:22 PM
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#15
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Guru
City: Alexandria, VA
Vessel Model: 2000 Wellcraft
Join Date: Sep 2013
Posts: 1,467
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Quote:
Originally Posted by Dawdler
one additional thought: be careful whom you invite aboard if you document. My understanding is that if a guest happens to bring a federal illegal drug, like marijuana, and it is found during a Coast Guard search, your vessel can be confiscated but you still owe the bank. My boat is documented but I don't allow anything illegal aboard.
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Extremely unlikely to happen in the US for personal use amount. Plus, there is an innocent owner defense to all drug related seizures (retired DEA agent). And, being federally documented or not, has no operational difference as far as drug violations go.
In another country besides the US? It depends.
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04-15-2019, 04:03 PM
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#16
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Guru
City: Z
Vessel Model: tbd
Join Date: Mar 2017
Posts: 1,027
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tons of information online
if you have a lender they will likely require it be documented
read and understand each state's laws where the transaction will take place, where it will be stored, and where it will spend any time, even passing through. there is not only sales tax, but use tax, and property tax considerations, depending on the state.
you will have to follow each state's guidelines even if its documented. you may have to get a decal/register in multiple states.
be very careful
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04-19-2019, 12:48 PM
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#17
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Member
City: Fort Myers, FL
Vessel Name: Maya
Vessel Model: American Tug 34
Join Date: Nov 2013
Posts: 10
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Congrats on your new boat. You might want to check the archives on this subject for more information. It has been written about lots, and lots.
Bottom line: the protection of the U.S government if documented is a myth. We no longer send the Marines to rescue you. Also states will still require that you register your vessel. In Florida at least, the only benefit is that you needn't mar the bow of your vessel with state numbers if documented, juts have to post the sticker. For international travel, some countries require documentation (which is just federal registration) some are happy with your state registration. Check with the consul of the countries you plan to visit. Happy travels.
__________________
David Hipschman
Skipper of M/V Maya, an American Tug
Florida-licensed and bonded Yacht Broker
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04-19-2019, 01:51 PM
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#18
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Senior Member
City: Hawaii
Join Date: Jul 2018
Posts: 275
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As many have said here before, there are no disadvantages to USCG Documentation and a few advantages. There are restrictions. For one you must be a US citizen, not a green carder or in the US on a work visa. You essentially can't get financing on an undocumented boat in the traditional marine finance industry. They want documentation so that they can record a Preferred Ship Mortgage on the boat with the National Maritime Center. This protects the lender and you against spurious claims by every Tom, Dick and Harry that might think he has a beef with you.
Once documented with the USCG you may still be required for some sort of of state registration and payment of taxes. Also, if you only cruise to Canada or maybe Mexico you may be ok with a state only registration but anywhere else in the world you my not be welcome. Also the resale value of a undocumented vessel could be effected. I've bought four boats, all documented, I wouldn't think of buying anything large that a dinghy that's not USCG documented or documentable.
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04-19-2019, 02:24 PM
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#19
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Senior Member
City: Green Cove Springs
Vessel Name: Laa-Dee-Dah
Vessel Model: 64’ Grand Banks Aleutian
Join Date: Feb 2018
Posts: 113
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This seems is a recurrent subject that never seems to get resolved.
1. Documentation provides a federal.title.to your boat. Good idea if you are going to take it out of country.
2. State registration requirements are defined by state laws and regulations. Read them before taking someone's opinion because many people who.profess to know are simply wrong.
3. IN GENERAL state registration is required not where you live but where you store and or mainly use your boat.
Further, states recognize boats move between states and have provisions requiring registration depending upon how many days your boat is in their waters (period can be 30 to 90 days and if exceeded within a year's period you can be required to register your boat). Again READ the state law. It's easy to find online through Google.
4. Registration is only part of the issue. The other is annual personal property tax. Hopefully your boat will reside in a county that exempts boats from this annual tax. For example, many counties along the Potomac River.
Good Luck and read the applicable laws, rules and regulations to be in the know.
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04-19-2019, 02:28 PM
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#20
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Guru
City: Vermont
Join Date: Jan 2013
Posts: 10,076
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A number of people have suggested that international travel is more difficult, or not allowed for an un-documented, a state-registered-only vessel.
Has anyone actually experienced this? Has anyone been turned away, or told not to come unless their boat is documented?
__________________
MVTanglewood.com
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