California Tax Question on Boat Purchase

[socasailor]

I am looking at a boat in the San Francisco area. I will be moving boat to San Diego (where I'm from).

How do I buy it so it's to my advantage for tax reasons?


I've never jumped through these hoops before and don't want to be slammed with a double tax etc. I've heard countless horror stories and don't want one of my own

Thanks!

[svcambria]

If you buy the boat in California - and don't remove it for whatever the current time minimum is - you will owe the state a use tax which is the equivalent to a sales tax. It will not be assessed twice, in SF then SD. Google CA Excise Tax Board.
Property tax is levied on Jan 1; you can only be in one place at a time so you will owe the local jurisdiction property tax for that year from where you were on New Year's, doesn't get reassessed if you move the boat during the year.

Michael

[jerrymc]

Originally Posted by socasailor

I am looking at a boat in the San Francisco area. I will be moving boat to San Diego (where I'm from).

How do I buy it so it's to my advantage for tax reasons?

There is no "advantage"..sales or use tax is collected by the state of California, not the municipality. Personal property tax is collected by the county where the boat is located.

[Capt Phil]

Buy her taking offshore delivery, head south past San Diego with your first port of call being Ensenada, MX. Berth her there for over 90 days then cruise back to San Diego (or keep going south). Do not stop anywhere in CA on your way down. The CA Franchise Tax Board makes the IRS look like little old ladies when it comes to collecting tax. Keep a log of your passage with entries including GPS positions. With any luck you will be boarded by USCG offshore which will further help document you were out there. Keep all your receipts from Mexico including fuel and groceries you picked up at the Gigante. Do not try and secure a berth in San Diego before you return from Mexico. If you do, you will run the risk of having to pay the San Diego County tax folks for the time you were in Mexico. I kept my slip in San Diego when I cruised the Sea of Cortez for over a year and when I returned, the County billed me for tax even though I had heaps of receipts from several marinas down south. When I challanged the tax, they said go ahead.. you will spend more on lawyers than the tax. I will never even visit CA again. Capt Phil

[ssanzone]

when i bought my boat in Half Boon Bay, CA, the PO had paid the 2011 taxes. I re-registered with the USCG and paid the associated fees to the USCG.

Early next year (as SVCAMBRIA said) I will receive a tax bill from Oakland CA.

If you are registering the vessel with the state, you will pay the taxes wherever you register her. what you pay (most likely in SD) will be the registration fees plus taxes calculated based on the highest value (assessed value / purchase price).

i am pretty sure in CA you have 14 days to register the vessel but i dont think the DMV will accept 'steve from CF said i had 14 days' as a valid argument in the event i am mistaken...so u should double check that.

-steve

[Fortytwo]

California State Board of Equalization

Sales and Use Tax Regulations

Sales And Use Tax Regulations - Reg. 1620

[hellosailor]

"Buy her taking offshore delivery," And either go uninsured and unfinanced, or what? Try to get insurance using the Mexican address?

And enter Mexico...how, with no documentation or registration, since there's no paperwork (except the bill of sale) going to happen without a home port on it, which doesn't happen until you get to Mexico?

Not rendering unto the local Caeser can be a difficult trick.

[Charlie]

As of right now evidence that you have left on the internet shows that you owe the use tax. The use tax is not applicable if you buy the boat and don not intend to keep it in the Grating State of Kalifornia. As far as Personal property tax is concerned the Jan 1 date is correct. The county where you register a boat will send you a letter asking for the personal prop tax. If you don't get one contact them b/c they will start giving you penalties.

[zeehag]

is not a use tax. is sales tax. you need to leave kali for 1 year to avoid it. you have 30 days in which to leave kali for points out of country before the tax kicks in. is a SALES not a use tax. they call it equalizartion as the boats registered via state dmv have to pay sales tax to get the dmv registration and title. documented boats pay this equalization tax because there is no sales tax on em.

[socasailor]

Thanks for all the replies. This is a USCG documented vessel.

[Doodles]

Originally Posted by socasailor

This is a USCG documented vessel.

Doesn't matter.

[snort]

Originally Posted by Capt Phil

Buy her taking offshore delivery, head south past San Diego with your first port of call being Ensenada, MX. Berth her there for over 90 days then cruise back to San Diego (or keep going south). Do not stop anywhere in CA on your way down. The CA Franchise Tax Board makes the IRS look like little old ladies when it comes to collecting tax. Keep a log of your passage with entries including GPS positions. With any luck you will be boarded by USCG offshore which will further help document you were out there. Keep all your receipts from Mexico including fuel and groceries you picked up at the Gigante. Do not try and secure a berth in San Diego before you return from Mexico. If you do, you will run the risk of having to pay the San Diego County tax folks for the time you were in Mexico. I kept my slip in San Diego when I cruised the Sea of Cortez for over a year and when I returned, the County billed me for tax even though I had heaps of receipts from several marinas down south. When I challanged the tax, they said go ahead.. you will spend more on lawyers than the tax. I will never even visit CA again. Capt Phil

So that must have been you standing in front of Harrah's spitting across the street!

Can't say I disagree with the advice if you're the typical guy who's worked damned hard to save to buy a boat and then deal with CA+ local area asking for 10% of its value up front.

[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.

[svcambria]

It depends. From the California Board of Equalization:
"Use tax is generally imposed on the purchaser of tangible personal property that is used, consumed, or stored in this state. Sales of vehicles, vessels, and aircraft by licensed dealers are usually subject to sales tax, for which sales tax reimbursement is collected at the time of purchase. Use tax applies to the cost of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties) or from outside California for use in this state. Use tax also applies to most leases of tangible personal property. Private party sales or brokered transactions are normally subject to use tax. If the first use of the property occurs in California, use tax may apply even if the purchaser is not a resident of the state. The sales and use tax are "mutually exclusive," which means that either sales tax or use tax applies to a single transaction, but not both."
Yeah yeah, clear as mud, but there it is...
And as mentioned above, it doesn't matter if the boat is documented or not, the very needy state of California will tax you unless you beat feet out of the state for up to a year.

Michael

[Capt Phil]

Yeh, Snort... that was me! I even bought a boat in Washington State, kept her in Canada for almost 6 months before heading to San Diego... State of Kalifornia still wanted to charge me sales tax... took 2 years after I sold the boat to finally convince them I didn't buy her in state! I would never own anything in that state and won't even cross the border... poison water over there! Capt Phil