California Tax Question on Boat Purchase

[JayCall]

Stephen-This issue seems to come up with great regularity. The answer stay the same.

1. The builder is correct in not charging you any sales or use tax as you are moving the boat out of California;
2. Hailing Port, what you see on the stern of a boat, especially a documented vessel, has no meaning with regard to sales tax, only physical location and length of stay do. That means don;t bother wiith Oregon, it will not avoid any tax.
3. When you bting the boat into WA and register it, you will owe use tax, which will be charged along woth the registration. The Use Tax is the same as, and the same rate as, regular sales tax.

There are not any shortcuts or legitimate ways to avoid the sales/use tax.

[EzzyD]

Originally Posted by JayCall

Stephen-This issue seems to come up with great regularity. The answer stay the same.

1. The builder is correct in not charging you any sales or use tax as you are moving the boat out of California;
2. Hailing Port, what you see on the stern of a boat, especially a documented vessel, has no meaning with regard to sales tax, only physical location and length of stay do. That means don;t bother wiith Oregon, it will not avoid any tax.
3. When you bting the boat into WA and register it, you will owe use tax, which will be charged along woth the registration. The Use Tax is the same as, and the same rate as, regular sales tax.

There are not any shortcuts or legitimate ways to avoid the sales/use tax.

Better yet... do an offshore delivery..... Then there is no question about Sales tax and then SAIL as fast as possible out of California.....

Mexico looks good...

Do not go near California, do not even have a 'hailing port' that is in California (they call it a home port and proof of intent to return, and thus make you liable.)

They need every $ they can get, and, as we all know (sarcasm)... only rich people have boats ... so they are fair game...

[MarkSF]

If we all based where we live, on where we pay the lowest taxes, we'd all be living in Sudan.

[Dennis.G]

You need to research this carefully. In general if you buy the boat in California you will be required to pay use tax (i.e., sales tax) on the purchase to California BOE. To avoid, you need to take off-shore delivery and document use outside of California for 6 months out of the first 12 months, and prove that there is no intent to use boat in California in the future.

Check gov website: FAQ - Use Tax on Purchases of Vehicles, Vessels, Aircraft - Board of Equalization

There are lawyers that specialize in these transactions, which is something you should consider in the boat builder does not have the exact procedure down pat.

By tax laws you will owe tax unless you prove exemption (sort of quilty till proven innocent) so proceed with caution.

[deluxe68]

When I was shopping for my current boat a dealer in San Diego tried to talk me into the tax evasion. I refused to sign a form stating that I never intended to bring the boat back to California when I fully intended to do so. Not gonna lie to save a few bucks.

[jeremiason]

Originally Posted by zeehag

the tax is not 10 percent is 8.25 percent--SALES TAX if you register it with a title, you pay any state at that time. documented boats you must pay sales tax also--that is the kali tax.

Not true...

California Sals Tax on Vessel is applied at the sales tax rate of the County the vessel was sold in...

In the San Francisco Bay area that could mean a sales tax difference of over 1% between certain counties, for instance when we left Alameda county, the Sales Tax was 9.25%, but in other counties it was still 8.25%

If this a New Vessel, the Sales Tax is paid at the time of purchse through the Yacht Broker..

If it is a used "Documented" boat, regardless if you purchase it through a Yacht Broker or a Private Patry, you can wait until you are notified by the State Francise Tax Board. You should receive a bill within 60-90 days after the purchase.

If it is a State Registered Boat, you will pay the Sale Tax when you register the vessel at DMV.

After that, you are subject to an Annual "Unsecured Property Tax" on the vessel. This is 1% of its asssessed value, plus any supplemental taxes the county applies, like 9-1-1 fees, Schoold District, etc. This fee is due every August and is based on the vessels location on January 1.

Finally, if you are in a Municipal Marina, you will be charge another Unsecured Property Tax on the dock or "Hole in the Water", since the Cities don't pay property tax on the Marina Land. In Berkeley (Alameda County), that came to about $120 per year on a 45 foot slip

So the bottom line is, the only tax advantage in California is making sure you purchase a vessel in a COunty with low Sales Tax.

You can also have a tax advantage with the Annual Unsecured Property Tax by declaring the boat a liveaboard, which gives you a break on the assessed value of the boat (Around $7500).

Finally, you can ask the County Tax Assessor to re-value you vessel each year, based on Blue Book Prices, which will lower you annual Unsecured Property Tax.

[Capt Phil]

Sudan is lookin' better everyday! Phil

[EzzyD]

Originally Posted by Capt Phil

Sudan is lookin' better everyday! Phil

and they have guns! "There is now thought to be one AK-47 for every family in southern Sudan..." (quote is from 2006)



ps: note my sarcasm here (so I do not get flamed too much....)

[Capt Phil]

Luv' it, EzzyD... you're probably right. I was in the Sudan in the 80's and it doesn't surprise me. They are kinda war-like and have been for many centuries. They are also very hospitable but short-fused. I recall it being very hot, dusty and air conditioning was non-existent. Cheers, Phil

[gjordan]

I think Dennis G has it nailed. In the 90s I did an offshore delivery from Alameda to Oregon in a brand new boat. The new owner was not allowed on the boat after the papers were signed and my contract said I was not allowed to stop until out of Calif waters. I officially turned the boat over to the owner in Oregon. To make it legal (I think) he rented an apartment in Oregon, registered his car in Oregon and got an Oregon drivers license. It saved him about 25000 dollars in sales tax, less what his costs in Oregon were. After 6 or so months he sailed back to Calif. Of course you start paying property tax once it is in Calif, but that is way less than sales tax. Lets face it, this is a legal scam that the wealthy can pull off to avoid taxes. The little guys like most of us would not benefit much at all from this sort of thing. I sometimes wonder how many pot holes there are on Calif highways because I helped cheat the state out of 25000 dollars. On the other hand, I bought 2 documented boats out of state and because I didnt bring them into the state for several years, I never paid sales tax. One of them I never entered Calif in and sold overseas. The other I had trucked home 3 years after I bought it and started paying property tax after it entered Calif. Most tax laws are written for the rich and only benefit the rich. Enough of my rant._____Grant.

[Capt Phil]

Didn't sound like a rant to me, Grant... I did many deliveries out to SD #1 (Harbor entrance buoy off San Diego) which is just outside the 3 mile limit for brokers who were arranging off-shore delivery for their clients. It isn't tax evasion, it is tax avoidance... big difference. The new owner was not permitted to be aboard the vessel he was buying as I recall. Rather, he/she had to hire another boat to take him out to the vessel he was buying, photos of that days newspaper, GPS co-ordinates and usually broker and myself who delivered the vessel off-shore to the buyer. Not certain if it is still necessary to go through the dance but it was a good source of income for me as I usually drove the boat to Ensenada, MX and the new owner became a member of the '91 day' Yacht Club. Phil

[stephenronning]

freedom45. buying from the broker. what's with all these boat's in my marina that have NEBRASKA as their homeport then? or all these HUGE CRUISE SHIPS that sail outta sandiego that are flagged in a carribbean enclave???
i think you guys are paranoid...but thx for the input.

[stephenronning]

woooooooooooooooooooooops..freedom45...IM BUYING FROM THE FACTORY!! IT'S COOL THEY ARE SENDING ME PICTURE'S EVERYDAY AS MY BOAT IS BEING BUILT...SO I GOT A DOCUMENTED BUILD JOB TO GO WITH MY BOAT-PURCHASE AGREEMENT...

[stephenronning]

HERE'S ANOTHER THING TO KEEP IN MIND.....i moved to las vegas for a job. i lived their for 2 year's. i had my two young son's. i sent them to visit their mom in wa state and she kidnapped them..so i went to the attorney general's office and he said, even after living their for two years that he couldn't help me because i wasn't a resident of NV!!!!!! what????? and either were my kids!!! even though we'd been living their two years...so you may all wanna read up on your BULLSHI$$ before you post these paranoid posts. you can say your are a black guy.....or a girl...or a boy even if your the whitest guy out there a man and or a woman...it's whatever YOU believe NOWDAYS....DON'T YOU GUY'S UNDERSTAND THAT...I THINK YOU GUYS SPEND WAY TO MUCH TIME ON YOUR COMPUTER AND NEED A 3 MONTH'S SAIL..........wow.,..what a nightmare

[savoir]

Originally Posted by Capt Phil

Didn't sound like a rant to me, Grant... I did many deliveries out to SD #1 (Harbor entrance buoy off San Diego) which is just outside the 3 mile limit for brokers who were arranging off-shore delivery for their clients. It isn't tax evasion, it is tax avoidance... big difference. The new owner was not permitted to be aboard the vessel he was buying as I recall. Rather, he/she had to hire another boat to take him out to the vessel he was buying, photos of that days newspaper, GPS co-ordinates and usually broker and myself who delivered the vessel off-shore to the buyer. Not certain if it is still necessary to go through the dance but it was a good source of income for me as I usually drove the boat to Ensenada, MX and the new owner became a member of the '91 day' Yacht Club. Phil

I went through that routine in 2006. Worked for me. Only one boat but two guys aboard both paid by buyer ( me ) but one working for seller. Seller guy handed papers to buyer guy, all smiled, took pics, came back in.