Sales Tax Boat Purchase

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steve poole

Member
Joined
Oct 10, 2011
Messages
13
Location
USA
Vessel Name
Meandering Joy
Vessel Make
Fleming 55
My wife and I have been working hard to afford a boat.* Our last child is a high school senior and we have been dreaming about doing the loop when she leaves for college.* We attended Trawler Fest in Baltimore and came home to file our taxes today and gosh, we owed a ton of additional money.* I always file an extension because the government gets so much of what we earn that I put it off until the last legal day.**

Can anyone tell me how to research finding the least expensive*state or country to register for sales and advelorum taxes?* We*hope to spend 500 to 700k on a used trawler and*I don't want to give any government any more money than I have to.* *

*

*
 
I checked your profile info to see your location.* It looks like you are in Georgia.* Sales and use taxes are a sticky subject, and something to watch as you enter states.

You are near a couple of friendly sales tax states NC and SC.* I believe NC max is about $1,800.00 and SC max is about 300.00.* That, however, does not get you our of the property tax if you stay too long.

You can buy a boat from a dealer in FL and leave the state with a special 90 day cruise permit.* Then pay the tax where you register.* This does not work for FL residents.* If you over stay your permit, FL will charge you double the tax.* They want documentation when you leave the state.* After staying out of the state for over 6 months, you can register in FL with no use tax due.

Hampton, VA is friendly to boats as for as property tax goes.* Not certain about the state sales or use taxes.* MD will get a use tax if you use the boat more in MD than another state no matter the length of stay.

Delaware has no sales tax that I know of.* Much depends on the state you register your boat and where you keep it.* Be sertain to check for the current situation in each state.

Good luck.

As you can see, tax avoidance is a complicated issue.
 
We when we sold our*last boat in North Carolina the buyer did not pay*sales tax.**I'm not sure about the tax on new boats.* NC does have property taxes though.* When we bought Hobo we formed a LLC in Oregon (no sales tax). *In the 18 months we were in the states*we*did not pay*any state or federal taxes.* I know we are only postponing the inevitable for once*we return the states we'll be paying sales tax and or property tax*or we have to keep moving.


-- Edited by Larry M on Monday 17th of October 2011 03:21:57 PM
 
Larry M wrote:
We when we sold our*last boat in North Carolina the buyer did not pay*sales tax.**I'm not sure about the tax on new boats.* NC does have property taxes though.* When we bought Hobo we formed a LLC in Oregon (no sales tax). *In the 18 months we were in the states*we*did not pay*any state or federal taxes.* I know we are only postponing the inevitable for once*we return the states we'll be paying sales tax and or property tax*or we have to keep moving.



-- Edited by Larry M on Monday 17th of October 2011 03:21:57 PM
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*Larry, you may want to look into Florida.*
 
If we had Cain's 999 plan all these games you guys are playing may not be necessary.
 
Everyman's idea of tax reform: make the other guy pay.
 
Where you keep the boat and for how long will be important to your tax situation. Florida has some good programs to assist the marine industry in selling boats located here and for new owners to keep them in Florida and spend money here after the sale. As a non- resident you can keep the boat in Florida for up to 6 months with no tax due, you must sign an affidavit stating that you do not intend to keep the boat in Florida and show that it is documented or registered in some other state. If later you decide*to bring the boat here you can after a time limit.*

If you want to keep the boat in Florida the maximum tax is $18,000 which is similar to the cost of registering it in a foreign country, but without the requirement to leave the US once a year and without yearly renewal costs.*If you register in another country you can cruise with a US customs cruising permit, but have to leave yearly if the boat was not built in the US. *Florida has increased tax revenues on sales of boats over $300,000 by 300% with the new tax cap.

Many states are looking for revenue and actively searching for boats to charge a tax to. In some states marinas are required to submit lists of boats kept there, other states have agents walking the docks to search for boats to send a tax bill to the owner. The key is how long the boat is in that state, rather than passing through.

This is a very complicated subject and the cost of a maritime attorney might be worthwhile depending on your situation.

*
 
In California, the buyer is subject to paying a use tax*(same rate as sales tax) directly to the state when purchasing from someone who doesn't have a permit for collecting the tax directly from the buyer.
 
yachtbrokerguy wrote:
Where you keep the boat and for how long will be important to your tax situation. Florida has some good programs to assist the marine industry in selling boats located here and for new owners to keep them in Florida and spend money here after the sale. As a non- resident you can keep the boat in Florida for up to 6 months with no tax due, you must sign an affidavit stating that you do not intend to keep the boat in Florida and show that it is documented or registered in some other state. If later you decide*to bring the boat here you can after a time limit.*

If you want to keep the boat in Florida the maximum tax is $18,000 which is similar to the cost of registering it in a foreign country, but without the requirement to leave the US once a year and without yearly renewal costs.*If you register in another country you can cruise with a US customs cruising permit, but have to leave yearly if the boat was not built in the US. *Florida has increased tax revenues on sales of boats over $300,000 by 300% with the new tax cap.

Many states are looking for revenue and actively searching for boats to charge a tax to. In some states marinas are required to submit lists of boats kept there, other states have agents walking the docks to search for boats to send a tax bill to the owner. The key is how long the boat is in that state, rather than passing through.

This is a very complicated subject and the cost of a maritime attorney might be worthwhile depending on your situation.

*
Click to expand...
*

What Tucker said! *Very well stated and accurate. *Typically your taxation will be a function party of where you buy but mostly due to where you physically keep the boat. *It is extremely important to understand the tax structure of sales or ad velorum tax wherever you contemplate cruising or keeping the boat. *It gets very complicated. *if you are in fact in GA you will not pay any sales tax IF it is bought private party to private party (can still be a brokerage boat- just have to have bill of sale from seller to you directly without routing it through brokerage firm). *However, you will get hit with the annual ad velorum tax. *My previous boat was valued right at $250k and that equated to about a $2,500 annual tax bill for that boat. *Most, but not all, states will also honor sales tax paid in other states but not ad velorum taxes paid. *It is important to understand all tax ramifications for any move or purchase made so that you are not surprised by the tax man. *In Ga if you don't pay they will chain you to the docks and they can order the funds be removed directly from your bank account without your consent- they don't mess around.
 
nomadwilly wrote:


If we had Cain's 999 plan all these games you guys are playing may not be necessary.
Click to expand...





Eric, I don't think that Cain's 9-9-9 plan would affect this at all. We are talking about state taxes. His would be a national sales tax of 9%. In my home state that would be and 18.75% total for state and federal sales tax. That would be a large burden to bear. It seems that Alaska has very few taxes. Other states deal with many state and local taxes. They can be a significant expense.

I understand that Maine has recently put a 28 day stay limit on visiting boats. After that use and advalorem taxes are due. This has caused me to change some plans contemplated for cruising Maine. I wanted to stay the summer up there, but I guess they didn't want me.
 
Don,

I think they want you big time *ALONG W YOUR MONEY *.

True about the 999. Sure wish there was a fair tax system and it will never be fair when cheaters abound. Whenever one cheats others are required to pay for the cheaters. AND when ever one gets a tax break other people pay for that person. I think cheaters and exemptions should be eliminated. Then we could all afford to pay our taxes.
 
Just a friendly reminder that discussion of our federal tax plans are perfect for hashing out in our OTDE section of the forums!! ;)
 
Moonstruck wrote:nomadwilly wrote:
*

If we had Cain's 999 plan all these games you guys are playing may not be necessary.
Click to expand...
*

Eric, I don't think that Cain's 9-9-9 plan would affect this at all. We are talking about state taxes. His would be a national sales tax of 9%. In my home state that would be and 18.75% total for state and federal sales tax. That would be a large burden to bear. It seems that Alaska has very few taxes. Other states deal with many state and local taxes. They can be a significant expense. I understand that Maine has recently put a 28 day stay limit on visiting boats. After that use and advalorem taxes are due. This has caused me to change some plans contemplated for cruising Maine. I wanted to stay the summer up there, but I guess they didn't want me.

Don:

Look into that a bit more before you deny us the pleasure of your company.

*

Here are a couple of statements I just quickly pulled off the internet:

1. "Maine law requires any boat less than one year old docked in Maine waters for 30 consecutive days or more to be assessed a use tax if a sales tax was not paid elsewhere. The tax is 5 percent of the sale value of the boat which, when levied on a multi-million-dollar yacht, can be substantial. If the sales tax paid on the boat is less than 5 percent of the selling price, the state can collect the difference."

2. "Maine law requires boat owners who keep their boats in Maine waters more than 75 consecutive days to pay an excise tax on that boat. This includes federally documented vessels."
 
David, if I read that correctly, a boat over one year old staying less than 75 days would have no tax due.* Is that correct.* If that is the case, we may cruise up to the Chesapeake in the summer of 2013, and store on the hard up there for the winter.* Sommer of 2014 cruise up to Maine for a couple of months.* Then back*South.

To further confuse things I read that the Maine*none registration period is 60 days, and the excise tax takes effedt at 75 days.* Also the sales tax rate was 6%

This cruising is*making my brain ache.
confused.gif
*


-- Edited by Moonstruck on Tuesday 18th of October 2011 03:10:46 PM
 
Moonstruck wrote:
David, if I read that correctly, a boat over one year old staying less than 75 days would have no tax due.* Is that correct.* If that is the case, we may cruise up to the Chesapeake in the summer of 2013, and store on the hard up there for the winter.* Sommer of 2014 cruise up to Maine for a couple of months.* Then back*South.

This cruising is*making my brain ache.
confused.gif
*
Click to expand...
I believe that is correct Don. (But if you get into Maine tax trouble, don't blame it on me as I have retired, my law license is now inactive and I can no longer give legal advice :bye:).
 
Woodsong wrote:
Just a friendly reminder that discussion of our federal tax plans are perfect for hashing out in our OTDE section of the forums!! ;)
Click to expand...
*Not political.* Seems to me that discussing taxes on boats is appropriate here.
smile.gif
 
I had no idea that taxes are levied on privately owned pleasure boats in the US.

A question, do you also pay for a yearly boat registration? For my IG I pay $200 a year for boat registration, that's the only State/Federal charge/tax payable.Mind you though, our tax on fuel is about 23% higher than the US, so maybe it evens itself out in the long run.
 
shrimp wrote:
I had no idea that taxes are levied on privately owned pleasure boats in the US.

A question, do you also pay for a yearly boat registration? For my IG I pay $200 a year for boat registration, that's the only State/Federal charge/tax payable.Mind you though, our tax on fuel is about 23% higher than the US, so maybe it evens itself out in the long run.
Click to expand...
In Maine, on a federally documented pleasure vessel, one pays a state determined (based upon length plus hosepower and age) annual excise tax to and for the benefit of the town where the vessel is located on April 1 of each year. The federal government does not charge an annual tax. One is not required to display any Maine registration numbers on the vessel if it is federally documented.

If the vessel is not federally documented, one has to register the vessel with the state (through one's town's tax collector) and pay a state registration fee (based upon horsepower, but a max of about $30) and must display the state registration number on the vessel. One also must pay the annual excise tax.

The excise tax on our federally documented 2001 IG32 is about $122/yr. The tax will be reduced 20% when the vessel is older than 10 years (next year!) And 40% when the vessel is 20 years old.


-- Edited by dwhatty on Tuesday 18th of October 2011 05:03:52 PM
 
Well that doesn't sound to bad, I got the feeling from reading the posts there was a substantial outlay each year.A bit confusing though, if i am reading this right, depending on the circumstances you may have to pay the federal government, or the state government or the local town council.
 
shrimp wrote:
Well that doesn't sound to bad, I got the feeling from reading the posts there was a substantial outlay each year.A bit confusing though, if i am reading this right, depending on the circumstances you may have to pay the federal government, or the state government or the local town council.
Click to expand...
One does not have to pay the Federal Government anything on an annual basis for registration. If you sell your boat and make a profit on the sale, which is unlikely, then you may have to pay Federal income tax. Yes, the state by state variation in other taxes and fees can be most confusing.
 
dwhatty wrote:shrimp wrote:
Well that doesn't sound to bad, I got the feeling from reading the posts there was a substantial outlay each year.A bit confusing though, if i am reading this right, depending on the circumstances you may have to pay the federal government, or the state government or the local town council.
Click to expand...
One does not have to pay the Federal Government anything on an annual basis for registration. If you sell your boat and make a profit on the sale, which is unlikely, then you may have to pay Federal income tax. Yes, the state by state variation in other taxes and fees can be most confusing.

*Shrimp, how does the $2,500.00 per year that Tony paid on his boat to the state of Georgia.* Or the $4 to 5,000,00 per year some states would charge for my boat.* In addition to that a sales or use tax that could run $50,000 to $60,000 on a new 40-45' boat.* Knowing what taxes are due where is very important.
 
Good grief, I thought the the $2,500 was a one off tax on buying the boat. The figures you have quoted above are amazing. From the outside looking in this seems a crazy situation.If, you say buy an RV and use it for leisure(not a permanent home) are you subject to the same type of tax issues?

Don, you mention sales tax and use tax together.Sales tax I understand is a one off cost, the use tax is obviously an on going expence. Over here if you buy a new boat or a second hand boat from a dealer you pay a 10% flat tax, we call ours GST, in the UK it;s called VAT etc. If you buy a second hand boat direct from the owner you do not pay that 10% tax. What is your sales tax as a % on boats in the US? From what you have posted it sounds like it varies from state to state, which means I guess that some states are better to buy in than others.
 
shrimp wrote:
Good grief, I thought the the $2,500 was a one off tax on buying the boat. The figures you have quoted above are amazing. From the outside looking in this seems a crazy situation.If, you say buy an RV and use it for leisure(not a permanent home) are you subject to the same type of tax issues?

Don, you mention sales tax and use tax together.Sales tax I understand is a one off cost, the use tax is obviously an on going expence. Over here if you buy a new boat or a second hand boat from a dealer you pay a 10% flat tax, we call ours GST, in the UK it;s called VAT etc. If you buy a second hand boat direct from the owner you do not pay that 10% tax. What is your sales tax as a % on boats in the US? From what you have posted it sounds like it varies from state to state, which means I guess that some states are better to buy in than others.
Click to expand...
*Andy, sales tax rates vary among the states usually from 5-9%.* That is a one time charge.* A use tax is similar to a sales tax in that if you haven't paid sales tax in one state it is charged upon registering in another state.* It can be the full amount or the difference in what was paid and the rate in the registering state.* Most states will charge sales tax again upon the purchase of a previously owned boat whether the tax was paid before or not.* Property taxes are assessed yearly and can be substantial.

Many people say that US citizens don't pay enough taxes.* I can assure you that there are many.* If we say anymore about this Tony will send us to OTDE.
 
The way I recommend to my buyers is to form a Delaware corporation, and let the corporation by the boat. Delaware has no sales taxes.

You must however be careful where you keep the boat. Georgia has a 184 day rule; if you keep the boat in the state longer, you must file personal property taxes. Florida has no such rule. SC is 180 days, NC is 90 days.
 
Where you buy the boat is less important than where you keep it and for how long. The states with a low sales tax often have a yearly tax that can get very high if you keep the boat many years. Some states have no sales tax and other states have no yearly excise or property tax, and what was true last year may not apply next year.
We can all be sure of death and taxes but we all try to avoid both of those things as long as we can.
 
Carefull Shrimpy we'll get banished.
Any how be alert the world needs more lerts.
I must admit the taxes in USA used to worry me when I lived there as a young guy in the 70's .
Local taxes, state taxes and federal taxes as well as the tax you pay when you get service/or not (tips)
Boy they all add up.
Just a different way of doing it I suppose.
 
One interesting thing when I registered our Monk in TN a year or so ago. I expected to pay the typical sales tax when I registered. Our Monk is one of the earlier ones and back then they used a couple of different builders. TN, and I believe most states, can only assess the boat off book value for the vessel. As luck would have it, the builder of my boat was also listed on the previous registration and when the tax people ran it when I went to register in TN, they could not find the builder so they could not fairly assess the vessel, per their own policy, to calculate the tax. So- I paid $2.00 as that is there policy if they cannot determine the value to tax through the NADA guides. It is rare that one can avoid taxes based on the policy of the taxing entity but I definitely did not complain. :) Other states have other rules- for example in GA, I did not have to pay the annual ad velorum tax on our Monk due to her age- they only taxed vessels 20 years old or newer.
So- buy an old trawler and maybe you can save a lot on taxes. I guess the tax man feels you pay your taxes in the form of sweat equity on the vessel and that is sufficient!!
:)
 
Might also want to check into N.H. No state sales tax...but VERY limited coastline ;)
And yes, RVers have the same issues to a degree.

Jim
 
Hi.
Just a question. Maybe somebody on here may help.

I'm Retired. Live in Australia.

Was thinking of buying around a 45\50ft trawler type boat over there.
Using it over there (USA) for a yr or two. Then ship it back here with me?.
Do the Intra coastal. Florida. Lakes. (Brother lives over the border in Ontario.)
Maybe the North West Passage. and down west coast of Alaska to where ships pick up boats for Overseas.


What are the rules for foreign ownership in US. And can I stay for more than 12 months if travelling.
Or does the 12 month in. 12 months out. Apply, regardless.

I don't need anything. and will be doing nothing but Spending money while in US. Definitely won't be staying.
Just visiting.
But reading here. Was just wondering. As here in Aust,. and other countries I've been to.
You just visit. Then leave. No taxes etc. Only on items you buy.

Sea don't bother me. I've been a Single Hander Sailor all my life. Sailed from Cape Town to Australia in '73.
And was a Deckie on North Sea Trawlers in '50's..

Just need a good sea boat??.

Regards
Macka17
 
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