Confusion About 'Use Tax' and 'Sales Tax'

[thelasthour]

I'm purchasing a used sailboat in Connecticut, I live in Florida, I want to keep the boat in Maryland for 2years. The boat is a Documented vessel, what tax do I pay and to whom. Connecticut sales tax, Fl sales Tax, or Maryland "use tax". If I pay sales tax at the time of transaction, do I pay another tax in Maryland after 90 days? Please explain how this works, because it may change my plans of storing it in Maryland.
Steve

[Cotemar]

You will only have to pay Maryland "use tax". As long as you take it out of CT before 60 days

[Captain Bill]

In most cases you'll recieve credit for your sales tax paid in another state against the use tax. Connecticut has a sales tax of 6% and maryland has a boat excise tax of 5% with credit for the sales tax in Connecticut so you would pay 6% to Connecticut and nothing to Maryland though you will have to provide proof of the slaes tax paid in Connecticut. No they will not refund you the 1% difference. Some states allow you to remove a vessel from a state without paying sales tax if you reside in another state and remove the boat from the state within a short period of time. Connecticut seems to be one of these states, so if you remove the boat from Connecticut immediately you will only owe the 5% excise tax in Maryland. Be careful, because if you don't report this to Maryland within 30 days they up the tax to 10% and tag on a 1.5% per month interest penalty. If you keep it in Maryland for 2 years you will not owe Florida anything as you have owned the boat in another state for more than 6 months. If you bring the boat to Florida for any reason in less than 6 months you will owe the balance of sales/use tax to Florida.

[S/V Illusion]

As explained to me when we bought a boat in Connecticut and immediately took it out of state, I owed them a fortune in tax.

Ct is a use tax not to be confused .

Regardless, do you really want to solicit and depend upon tax advice from a bunch of strangers on the internet? Opinions fly around this board and usually differ, many are stated as fact when flat wrong and usually based upon nothing more than supposition.

All states have tax info readily available on their web sites. If you need to hear it, you can also speak directly with them. Even than, they sometimes make mistakes so double check but you certainly are better off there than here.

[Kettlewell]

I will second what Illusion said above--do your own research and go right to the source documents on the state Web sites. Be wary of the answers you get even from state officials--check the actual laws. And of course each state is different.

[callmecrazy]

I bought my boat in MD while residing in OH.
You can take your bill of sale (or whatever) to a MD DMV and apply for your MD title with no hassles (even while your boat is still in CT). You'll pay an "excise" tax, I think it's about 5%, maybe even less... And pay for the 2 year registration, which is like $20. That's it. You'll get the Title and registration in the mail.

I bought my boat in November and the DMV encouraged me to wait until January to register it because they don't pro-rate registrations.

Depending on how soon you'll be moving the boat down to MD, just get the 2011 MD sticker on the boat and it should be fine for whatever specified period of time CT allows (several months I'm sure).
No probs.

[Captain Bill]

We may in fact not know what were talking about, but here is a link to the form that must be filed with the Connecticut department of revenue for the sales tax exemption.

http://www.defender.com/ftp/cert-139.pdf

[callmecrazy]

Just read back through... Let me clarify.

Don't pay CT anything. Go directly to MD (because that is where you're keeping the boat) and get MD Title and Registration. FL needs to know nothing.

You can put your MD sticker on your boat, while in CT, then move the boat to MD within the "use tax" time limit (60 days according to this).

You do not need to hire a lawyer for this transaction.

MD will not charge you sales tax, but they will charge you an "excise" tax, which is lower than sales tax and 100 percent (so they say) goes directly to waterway management.

[Cotemar]

callmecrazy,

Perfect summation.

thelasthour, sign the papers and lets go sailing.

Mark

[Captain Bill]

You probably want to be careful about filling out Connecticut's required paperwork or they could come after you anyway. I bought my boat from Florida and moved it immediately to NC. Florida had a similar form to that in Connecticut, plus I had to send them proof I had left the state within the required time period. The form was no big deal and it saved me from having to argue with the state of Florida.

[thelasthour]

Thanks to all who responded. Thanks for that link to the form Bill. I think I understand it now.

[FrankZ]

Maryland has a 5% excise tax.

Registration is $24.

Maryland DNR boat registration.

[denverd0n]

Originally Posted by Captain Bill

If you keep it in Maryland for 2 years you will not owe Florida anything as you have owned the boat in another state for more than 6 months.

Not necessarily true. You must also use the boat in the other state. That is, if the evidence indicates that you bought the boat, and then simply stored it in another state for some period of time in an effort to avoid Florida taxes, but never really intended to use it anywhere but Florida, then you will indeed be assessed a use tax by Florida. Doesn't really matter how long ago you bought it.

So, if you buy a boat in another state, use it there, but bring it to Florida less than six months after the purchase date, Florida will tax it. If you buy a boat in another state, never use it there, and then bring it to Florida after any period of time, Florida will tax it. If you buy a boat in another state, use it there, and then bring it to Florida after more than six months has elapsed, Florida will NOT tax it.

Of course, not many people are going to buy a boat and then just let it sit for two years, but in case anyone else is reading this and thinking that they can avoid the Florida tax by just storing their boat outside the state for six months and a day... Nope, sorry, doesn't work that way. If the tax man figures out what you are doing you will be in very deep trouble.

[joey69]

Just move to CT.

[sloop6312]

i moved my documented vessel from IN to MD, where it has been for the past 11 years. MD will charge you a 5% excise tax on the purchase price or book valueof your vessel, whichever is greater. MD will not issue a DMV registration for a USCG documented vessel. The bi-annual sticker is $24.