California taxes???

I am a resident of Alaska with a home and business in Alaska. My boat is registered/documented in Alaska. I want to take the boat to Mexico and beyond this fall after hurricane season. I am thinking of stopping in San Diego for several months. How long can my boat be in California without having to pay taxes?

You can find the actual legal language online and try to sort it out. Mostly the intent is that transient/visitor boats don’t get a tax bill, but they keep it intentionally slightly fuzzy to make it harder to avoid taxes if you are actually based there.

In practice, there are a couple of good guidelines. Stay in CA a total of less than half the year and be working your way somewhere, and they probably won’t bother you. Also, the reference date is Jan 1, and they try to “inventory” the boats that are physically located there on/around that day. Lots of boats head south in November, and part of that reason is to not be on rent rolls for December and January. If you are only passing through for a few weeks, don’t worry about the Jan 1 date. If you are in state for several months including Jan 1, its more likely that you will get a tax bill and have to work it out with the tax man.

Divealot said:

I am a resident of Alaska with a home and business in Alaska. My boat is registered/documented in Alaska. I want to take the boat to Mexico and beyond this fall after hurricane season. I am thinking of stopping in San Diego for several months. How long can my boat be in California without having to pay taxes?

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Is your boat documented? If so, registration isn't required in California.

Then your worry is property taxes. Typically they are based on presence on January 1. However, the law actually reads state of principal use. Several months is a bit vague, but generally if you're just passing through on the way to Mexico, you would not be subject to property taxes. The problem is if you're there on January 1 you will be identified and taxed. The way around that is to meet with the San Diego Property Tax Department in advance, provide them information on where you originated the trip, where you're going, when you intend to leave. Prove that they are not your primary state and you're just passing through.

Our situation was that we arrived in Northern California on October 12 from Washington. We reached San Diego on December 15 and were leaving on January 8. We spoke with the tax authorities on arrival and notified the marina, leaving an identical information packet on site. The inspector did check the marina, but no attempt was made to charge us property tax.

Now, at some point, the amount of time you spend in California could make it your state of primary use. Over six months might. It's a judgement call at that point.

Finding a slip to park for a few months in San Diego is gonna be tough. A few days to a week is possible with prior planning. We were able to use the Navy marina for a week or so when we made our trip south. And this affords stocking the boat up, as once you cross the border it becomes more difficult, especially spare parts. Ensenada is a safe harbor (North of the Hurricane zone), a short run over the border and much easier and cheaper on moorage. And its a short run back to the states. Lots of Gringos park there boat here for extended periods.
Cheers

We spent 2 months plus twice in California with our boats. At the time we were Washington residents and didn’t have any problem. It was in the late summer and early fall during the south bound migration. We also never heard of anyone being questioned. That time of the year is a money maker for marinas and marine services as it’s getting toward the end of hurricane season and there are a lot of boats getting ready to head to Mexico or points south and west. We always felt welcome.

Larry M said:

We spent 2 months plus twice in California with our boats. At the time we were Washington residents and didn’t have any problem. It was in the late summer and early fall during the south bound migration. We also never heard of anyone being questioned. That time of the year is a money maker for marinas and marine services as it’s getting toward the end of hurricane season and there are a lot of boats getting ready to head to Mexico or points south and west. We always felt welcome.

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Only January 1 that puts one at property tax risk.

You shouldn’t have any issue finding a slip in the winter. Our marina usually has quite a few slips open up after the fall. This is at Cabrillo Isle. Mission Bay will also likely have room.

BandB said:

Only January 1 that puts one at property tax risk.

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Its not that simple. Many have tried being there most of the year and hiding in MX for Jan 1 and they end up with a tax bill.

Be there for no more than a few months and be out of state on Jan 1 and you are in good shape.

guy with a boat said:

Its not that simple. Many have tried being there most of the year and hiding in MX for Jan 1 and they end up with a tax bill.

Be there for no more than a few months and be out of state on Jan 1 and you are in good shape.

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Yes, as I wrote, it's the state of principal use. If you primarily boat in California and sneak off to Mexico, you're taxable in California. No ambiguity there.

However, if you're transiting California on your way elsewhere and California is not your primary boating state but another is, then you're not taxable.

That's also why I recommended clearing it all with the local tax department. Our situation was very straightforward. Purchased boat in Washington. It's registered and sales tax paid in Florida. We are on our way to Florida in the boat. Left Westport WA on September 30. Arrived in San Francisco on October 14, California a couple of days earlier. Cruised California and arrived in San Diego on December 15. Leaving California on January 8 for Ensenada, but destination is Fort Lauderdale.

If the facts are on your side, you'll be able to convince the local tax authority and do so in advance, not after being taxed. However, if you're simply trying to avoid California taxes but intend to do most of your boating there, then you should be held accountable and should pay California property taxes.

A little late (shouldn't be leaving for Mx in May anyway LOL) but have had experience with Calif tax guys. They are aggressive, but like everyone here states, if you are honestly transiting and have documentation to prove it, they will back down. But, they may require lots of documentation so save everything, all receipts, bills, contracts etc. We bought a 70 fter in Fl. and Documented in Hawaii (we have a home there) and had papers sent to our Calif home address (yes we knew Ca would question this but we knew we were being honest). They survey all documentations. We had all the paperwork to show that the boat was bought in Fl, moved to Ga. then cruised the carribbean and never planned to or entered Ca. waters. After a year they dropped the case but we were required to provide proof of dockage, fuel etc costs outside Ca. FYI, buying in Fl you have 30 (or 60 can't remember) days to move vessel or you owe Fl sales tax. Moving to Ga. they didn't care, no sales or property tax (only left boat for 6 months so not sure if you leave it for years). Documenting in Hawaii would required property tax if or when you entered Hawaiian waters. Totally legal. This is a case where documentation paid for itself.

When I left California 3-1/2 years ago, I was expecting a tax problem. I called the State Board of Equalization - they are pretty easy to call - and informed I was leaving. I forwarded an email from my marina stating I was departing with a cover email stating I was not relocating to any other California marina (they would know the following year). And that was that - nothing else. Now, not exactly a valuable boat, but I didn't get the impression the California Tax Nazi's care about value: it's the principle for them.

Usually I don't 'break into jail' but in this case, I think calling them proactively was helpful.

Peter

Suggest you contact Chris Wenthur law group in San Diego. I used them on four boats and they can provide you the latest information. A simple phone call may help avoid some pain later.

John T - N4050, N4061, N3522, H38E (former owner)

Like you I am a resident of Alaska, and like you I took my boat down the coast last year.

As a bit of advice...

Forget San Diego. Reserve a slip at Marina Coral in Ensenada MX.

My opinion is that Marina coral is oner of the best run marinas I've had the pleasure of visiting. There you will find a almost perfect experience. The marina is both stayaboard friendly and offers all of the services you might need if you leave your boat for an extended period of time.

I liked it so much that I am seriously considering moving the boat back north from our "home" slip in La Paz to Ensenada during the peak of our very hot summer.

I don't know if there was any mention of the size of your boat (the OP) but I assume it might be 40+. My experience about open slips in San Diego once you get into the 45 and larger size is not the same as lwarden. But like so many things timing is everything so start asking around now.

Thread drift but one challenge is it sounds like you would be living aboard for several months. I can only speak directly for my current marina but I think that would put you into the live aboard classification and the marinas here usually don't just look the other way. I had an out of state neighbor who started getting pressure after only a few weeks. So even if slips happen to be available I seriously doubt you could find a liveaboard slip as those waitlists are often multiple years.

Kevin's suggestion of considering Ensenada is a good one. You could still spend some time in San Diego on your way south and given it is only 70 miles you could bounce back up for short stays if desirable. It is fairly easy to get 3 day mooring permits for Glorietta Bay or La Playa, either are great anchorages in San Diego with great access to shore activities. In Mission Bay you don't need a permit for up to 72 hours.