Sales Tax - Purchase Between Two Individuals ?

[Kettlewell]

Someone said you pay sales tax in the state where you are resident, and that is incorrect. You pay sales tax in the state where the boat is located--or in most cases the state of principal use. Most states grant you 60 or 90 days grace period before you are supposed to reregister in the new state and possibly pay additional taxes.

[nial]

From personal experience. Buy the boat wherever. Leave the boat wherever as long as it's out of the water. Register it in Delaware under the assumption that you will be using it in Delaware waters for more than 6 months per year. No sales tax. When it's time to renew registration, do it in whatever state you want, no sales tax. However some states have a use tax. That's a different kettle of fish.
nial

[Kettlewell]

By the way, a Delaware hailing port is a red flag for the tax folks. Even if it is a legitimate hailing port they look for boats from Delaware because so many people use the state as a tax dodge. Some people don't realize that other states, like New Hampshire and Rhode Island, also don't charge sales or use tax on boats. I believe in some states, like North Carolina, if you purchase a used boat from an individual there is no sales tax due.

[andreas.mehlin]

1) I'm not a US citizen or resident (Swedish)

2) I will have the boat in US for about 2-3 months at the most and will then move on to other countries

3) I will buy the boat from an individual (not from a company/business)

4) Delaware seemed to be the only option if I wanted to register it in US, but it if I found a state/country better suited for my purpose I choose that one. For instance: If the boat is less than 12m long I have no problem register it in Sweden. If I decide to register outside US I assume I shall not pay any taxes in US? I know that I have to pay VAT in Sweden if I bring the boat to Sweden (which I'm not going to).

50 states seems like 50 different countries Many rules to look in to.

[Vasco]

Andreas

Internet advice is worth what it costs you. Your best bet is to discuss these matters with a competent broker. Find the broker first.

[Kettlewell]

Internet advice is worth what it costs you. Your best bet is to discuss these matters with a competent broker. Find the broker first.

The key word is "competent." Most brokers do not provide good advice on this subject, and even many law enforcement and tax people are ignorant about the laws in their own state. My advice is to look up the actual laws on the books in the state where you plan on purchasing the boat and the state where you plan on registering the boat. You can usually find these on the Internet.

A couple of further thoughts. If you plan on using the boat on the water in the USA during that 2-3 months you'd better have it registered somewhere. You will need a US address to do that. Depending on what state you buy it in, you may or may not have issues with the tax people there. For example, in some states brokers are required by law to notify the tax authorities whenever a boat transaction takes place. In other states, not a problem. Chances are that if you are purchasing direct from an individual there won't be any reporting done, but you have to make sure you get all the paperwork right so you can register it yourself. If you are not using a broker be sure to get a signed and notarized Bill of Sale--use the U.S. Coast Guard form for that so that it is instantly recognizable. Also, some states will have a title certificate that has to be properly signed over to you, and you will probably need that title in order to register the boat. Or, if it is Coast Guard documented it will have to be removed from Documentation by the current owner before you can legally register it.

[andreas.mehlin]

Thanks for the advice!

Those boats I have found interesting (at the moment) are sold without a broker

[Kettlewell]

Here is what the Delaware website says is needed to register the boat:

Q. What forms do I need?
A. A Boat Registration Application must be completed. If the boat is titled in another state the original title must be submitted and will be kept. If the boat comes from a registering state then the registration is required with a notarized bill of sale. If the boat is new, the manufacturer’s original certificate of origin (MCO) must be submitted. All paperwork must include the vessel hull identification number. If the boat is currently registered in Delaware, the old registration card is required with a notarized Bill of Sale including a description of the boat. A notarized Bill of Sale is not needed if both buyer and seller appear in person with picture IDs.

[CarlF]

I also am skeptical of advice on the Internet but I sure wouldn't trust a yacht broker for tax advice

One good plan would be to talk to a yacht documentation company. It will cost you something but they deal with flagging all the time. They can also do the paperwork for you (for a charge) You will be much better off if you plan now in what country you will ultimately flag the boat. Each has costs and rules. The 2-3 months in the US is not your top concern.

Yes the US has a mix of federal and state laws but the EU has a similar situation. Many states have bigger economies than European countries.

Carl

[Vasco]

Originally Posted by CarlF

I also am skeptical of advice on the Internet but I sure wouldn't trust a yacht broker for tax advice

.

Carl

I bought my Beneteau in the states and the broker was very helpful regarding the sales tax situation. As I said earlier you need a competent broker, usually a high volume broker with experience selling to "foreigners".

[Hud3]

Right, he has to move it to a non-sales tax state. When I read the original post, I made the assumption he was buying it in Delaware, which on re-reading might not be the case.

If the OP would tell us more, like in which state the boat is for sale, and where he'll be keeping it, I'm sure he could get some good advice. Right now we're just guessing.

Nonetheless, an individual selling a boat isn't responsible for collecting sales tax for a state, since he's not a merchant registered with the taxing agency. The buyer faces that issue when he goes to register the boat, since the state agency will require a Bill of Sale. If he registers the boat in Delaware, he won't be asked to pay sales tax, since there isn't any sales tax in Delaware.

[Kettlewell]

Here's an article on how to avoid paying sales tax legally.

[andreas.mehlin]

Thanks
Most of the boats I'm interested in are located in Florida.

[bella]

Originally Posted by andreas.mehlin

Thanks
Most of the boats I'm interested in are located in Florida.

Sales tax is 7% NO use tax IF the boat is older than 1981 or back yrly fee is, or was, $4 (classic boat)... title transfer is cheap too.. few hundred dollars. becomeing a fla resident is fairy easy process too.. call www.boatmail dot com and talk to them about mailforwarding and the other stuff... local tax office is pretty good to deal with.

Fla taxes are fairly simple IF you use that service then you pay for it.. just a warning titles that used to cost $12 are now $75 if you lose that first one.

[svBeBe]

Originally Posted by svBeBe

Sales Tax is a State Tax. There are 50 states and no two state's laws are identical. You need to get specific advice about your transaction from a knowledgeable party. There are agents who specialize if yacht registration located in most states...these are not yacht brokers or sales agents.

Do a Google search for "Delaware Boat Registration." You will find a number of businesses specializing in registering yachts.

Enough said.

Bill