Sales tax

Hi all
New to forum and have a sales tax question I live in NY state and
Have an 8 percent sales tax, when purchasing a used
Trawler will I have to pay the tax
I will be selling my house and living on board travling

What is your question??


I'm not familiar with NY laws but in most states if you trade something in you get a tax credit based on the value of the trade in. For example if you buy a car or boat for $50,000 and your trade in is worth $20,000 you will only pay tax on the $30,000 difference. But the two things involved in the trade have to be like for like....vehicle for vehicle, boat for boat, etc.


I doubt you will be able to get a tax credit for selling your house and buying a boat.

Knacc said:

Hi all
New to forum and have a sales tax question I live in NY state and
Have an 8 percent sales tax, when purchasing a used
Trawler will I have to pay the tax
I will be selling my house and living on board travling

Click to expand...

Where will you be docking your boat? I know you indicate traveling but I assume there may be some time before the traveling starts. How much?

What state will the trawler be registered and kept / used in? Even if your trawler is documented as opposed to registered, the state you call home will want sales tax. If living aboard, you probably want to register it in the state you will be living in. Some states have laws requiring the equivalent of sales tax if they are your primary use state or reside in the state more than a certain number of days in a calendar year.

Ted

It's pretty easy, If your on the move traveling from state to state and not staying for more than the states limit (think 60-90 days) than no excise tax is due. However should you be in the position to keep your boat in a slip or mooring for the summer or winter your presence will most likely be known by the authorities that be. At such point your excise or sales tax will be due, perhaps with penalties.
My advice is to consider your timing regarding travel

My plan wa to purchase boat after hose is sold and the leave of it is close to fall I would head south if in the beginning of summer head north. I have a 30 foot sea ray now and will be selling it as well. I do think that there is any possibility in trading it inn since most boats are through brokerage. I remember reading my state law states if the boat is in state for more than 5months it has to have a state sticker if it is documented. I just did not imagine having to pay 8percent sales tax on what is considered a second home.

Yep, plan on it if you plan on keeping it in NY.

The number of days in a state have more to do with registration than sales or use tax.

While they seem connected, they arent.

You can be forced to pay use tax in the state you live even though the boat is rarely there.

Tax laws are not DMV laws....but every state is a little different.

Dcbeach said:

It's pretty easy, If your on the move traveling from state to state and not staying for more than the states limit (think 60-90 days) than no excise tax is due. However should you be in the position to keep your boat in a slip or mooring for the summer or winter your presence will most likely be known by the authorities that be. At such point your excise or sales tax will be due, perhaps with penalties.
My advice is to consider your timing regarding travel

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You still have to register the boat. No registration without paying the sales tax. Many states require the registration sticker even if the boat is documented, home ported in their state.

Knacc said:

My plan wa to purchase boat after hose is sold and the leave of it is close to fall I would head south if in the beginning of summer head north. I have a 30 foot sea ray now and will be selling it as well. I do think that there is any possibility in trading it inn since most boats are through brokerage. I remember reading my state law states if the boat is in state for more than 5months it has to have a state sticker if it is documented. I just did not imagine having to pay 8percent sales tax on what is considered a second home.

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Why would you think that second homes are exempt from sales tax? You pay a sales tax when you buy a home.

Ted

Well said Ted

Ok I got it----you have to pay the man. Thanks all

I just bought in MD 5%. I'll be keeping her there till spring. Then moving to Ct. I'll already known Ct will hit me up for another 1 3/8%

Taxes and Death...........

O C Diver said:

Why would you think that second homes are exempt from sales tax? You pay a sales tax when you buy a home.

Ted

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Maybe it's symantics, but a house purchase typically incurs a transfer tax, not sales or use tax. And it's at a very, very different rate than the 8% sales tax the OP is facing.

He has a good point in that a house is taxed differently than a boat, even though in his case both are/will be primary dwelling. But reality is that a boat is considered like any other purchase (or much more so) when it comes to sales and use tax, and even though it can be used as a primary dwelling, it doesn't enjoy the same tax treatment as real estate.

You may be able to deduct the cost of the boat from the amount of capital gains you make on the home sale to reduce your capital gains tax. Normally if you sell a house and then buy another house within a year the gains are not taxed....IF ( and this is not a given ) you can convince the IRS that your boat is your home, you should be able to deduct the cost of the boat from the gains on the home.

In Mass we don't pay sales tax on a home. We have an annual tax bill we pay the city but not on the sale or purchase of the home.

If you really plan to "cruise" and live on the boat arrange to buy it in Rhode Island. No sales tax and boater friendly. Just do not stay anywhere else (another state) long enough to become a "resident". The longer you own the boat the less of an issue it becomes.

Talk to a documentation service or attorney knowledgeable in boats and NY. I believe NY takes an aggressive stance on anyone who is a NY income tax payer. They can tell you the ins and outs and what might work in your favor. Also, where you take delivery could be a factor.

Now, this may not apply to your boat, but NY has copied FL (so have a few other states) in setting a cap on boat sales tax. They only tax the first $230,000 or purchase price.

My home port is Oregon (no sales tax), something I planned a long time ago. I winter at a private dock with no mail service. I have a commercial mail box. That makes me an Oregon resident. Anything big I buy in the winter.
I don't know if the East Coast has any no sales tax states, but it would be worth finding out.

Sales tax laws are more complicated than you think. If an Oregon resident buys a California registered boat they must pay California sales tax, even if they take possession of the boat in Oregon and register it in Oregon. Talk to an expert first.

Wow. When I practiced law in this area California was aggressive, but this would take the cake. Do you have any reference for that comment?

Think about it in order.

If your intention is to sell your home, use the proceeds from that sale to buy a boat, then travel...

*** Sell your house
Now you are homeless, and have no physical ties to any state. Yes you still have a drivers license from your old state but you don't live there anymore.
*** Establish residency in a state with no sales tax. That is not illegal or immoral. You gotta call somewhere "home". Get a drivers license, register to vote, etc...Rent an apartment to stay in while you search for and close on a boat.
*** buy a boat and travel

It is world class stupid to pay sales tax in a state you no longer live in, and have no intention of living in.

We live in Michigan which is obsessed with collecting sales tax even from boats just traveling through the state. We bought a boat in Virginia 2 years ago. I paid the 2% VA sales tax because we left the boat there over the winter. When we got the boat back to MI we had to pay the difference between the 2% we paid and the 6% that we pay in MI. If I were looking for a state to "live" in, I would choose one that has a sales tax, but one that the tax is small. That way you will have paid sales tax and have the boat registered and you should not have a problem traveling through states that want proof of sales tax being paid.

Best to talk with a knowledgeable tax attorney. Regardless, the authorities will be after for any use tax (same as sales tax but purchased from a non-business entity) on the boat's purchase if your new boat will be in a boat-purchase-taxing jurisdiction.

In general, taxing authorities assume if you purchase anything, you can also afford and will pay the assessed taxes.

That's the cost of "civilization" and supporting those unable to fully contribute to society.

While I purchased a boat from China, I paid use tax to the State of California equivalent to a brand-new, mid-sized automobile.

Some great advice from all. I would also point out, if you buy a vessel in another state from where you live, that state will also get a % of the sales tax. So have a chat with an tax attorney.


Cheers and good luck.


H.

Benthic2 said:

In Mass we don't pay sales tax on a home. We have an annual tax bill we pay the city but not on the sale or purchase of the home.

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It's not called "sales tax", but real estate transfers are definitely taxed in Mass. They call them transfer stamps or deed stamps or something like that. But a tax is a tax by any other name.

hfoster said:

Some great advice from all. I would also point out, if you buy a vessel in another state from where you live, that state will also get a % of the sales tax. So have a chat with an tax attorney.


Cheers and good luck.


H.

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In my experience the most a second state tags you for is the difference in the 2 amounts of sales tax.

If the statevyou bought in charges 5% , but your home state where you register the boat charges 7%, you cough up the difference.

I think some states forgive the difference if the boat has been kept out for a certain length of time.

Is this what you were refering to? I havent heard of a state looking for tax beyond what they would charge just in that state.

If you own a boat and move to Fl, there isn't any additional tax. Don't remember how long you had to own the boat before you became a FL resident, maybe one year.

Ted

Knacc said:

Hi all
New to forum and have a sales tax question I live in NY state and
Have an 8 percent sales tax, when purchasing a used
Trawler will I have to pay the tax
I will be selling my house and living on board traveling

Click to expand...

Knacc,

Yes, you can avoid sales tax but do your own studying prior to buying the boat. Then call a tax person that knows boats... a marine expert, not just your local guy.....if you need.

There's a few folks that are constantly moving and never spend enough time in one state to be taxed. And the situs of the boat is in a non taxed state. There's a strong argument to NOT own a boat in your personal name, or any toy for that matter. If you move out of your dirt house and sell it, you can probably live anywhere and set up a mail box there. Perhaps the folks that do it will comment.

And the boat does not have to be registered where you live... but preferably the boat would be not be in your name. If you register it in a state that has tax, you'll most likely pay it.

There's a bit of research, and certainly a reason to download the tax code from each state you plan on spending a lot of time in.

A quick search comes up with this:
How to avoid paying taxes on your boat...legally! - Answers in Boat Tax Law

A start for now.

(disclaimer: not a tax expert by any means and this info is mostly info I'd heard from others. Most of us just pay the piper and go.)

With some good non-tax state alternatives near you like Rhode Island and Delaware, no need to establish NY as your home port and throw away 8%.
Also if you're going to be moving it to different states, you might look into USCG documentation rather than just a state registration.
"The Man" likely already collected a big chunk of money from the guy that bought the boat brand new....

Hamrow said:

With some good non-tax state alternatives near you like Rhode Island and Delaware, no need to establish NY as your home port and throw away 8%.
Also if you're going to be moving it to different states, you might look into USCG documentation rather than just a state registration.
"The Man" likely already collected a big chunk of money from the guy that bought the boat brand new....

Click to expand...

In addition to looking at non-sales tax states, look for states that do not apply the tax to used boats bought from individuals.

ksanders said:

Think about it in order.

If your intention is to sell your home, use the proceeds from that sale to buy a boat, then travel...

*** Sell your house
Now you are homeless, and have no physical ties to any state. Yes you still have a drivers license from your old state but you don't live there anymore.
*** Establish residency in a state with no sales tax. That is not illegal or immoral. You gotta call somewhere "home". Get a drivers license, register to vote, etc...Rent an apartment to stay in while you search for and close on a boat.
*** buy a boat and travel

It is world class stupid to pay sales tax in a state you no longer live in, and have no intention of living in.

Click to expand...

We are thinking about doing something like this, but it's because of state income tax, not sales tax.

We plan to sell our house in the next 6 months and move into a rental. When I retire in 4 years, we will be cashing out one of our retirement accounts to buy our retirement home. Prior to this, we may set up residency in Florida. This way, the withdrawl from the retirement account is not subject to state income tax in our current state.

We plan on living on the boat we buy (hopefully in the next 2 years, yes we will pay sales tax on the boat) and living in Europe for about 2 years. We then will set up residency somewhere in the U.S. and likely buy our retirement home.

For the OP, I would ask have you considered state income tax as well as sales tax?

Jim

tiltrider1 said:

Sales tax laws are more complicated than you think. If an Oregon resident buys a California registered boat they must pay California sales tax, even if they take possession of the boat in Oregon and register it in Oregon. Talk to an expert first.

Wow. When I practiced law in this area California was aggressive, but this would take the cake. Do you have any reference for that comment?

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Ask any California yacht broker about sales tax. Call the California board of equalization for a ruling or just google California boat sales tax to find a copy of the code.

California will give you credit for sales tax you pay to your home state.

tiltrider1 said:

Ask any California yacht broker about sales tax. Call the California board of equalization for a ruling or just google California boat sales tax to find a copy of the code.

California will give you credit for sales tax you pay to your home state.

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I question this. Here is a quote from the California Sales Tax booklet:

The law allows several exemptions. For example, tax
may not apply to your purchase if the vessel:
• Was purchased for use outside California

Also if I am in Oregon, receive the boat in Oregon and the use the bill of sale to document the boat in Oregon how is the state of California going to interfere.

Sales tax (misnomer it is actually a retail occupation tax) is closely limited by Supreme Court decisions requiring situs in the state attempting to impose the tax. Thus the exception for interstate sales.