Purchase tax, laws, and state stay time questions

[Tony B]

Eventually, you will have to pay sales tax somewhere.
We bought a boat in Dunedin, Fl. Was not able to move it for a few months. We had to buy some kind of sticker for I think about $20, maybe much more, just dont remember. All I remember was it was green and we had 90 days to get out of Fl. or pay Fl. sales tax.
We moved the boat to Tx. a few months later. Didnt register it there either. We then received a letter from Ms. Dept. of something or other about 3 years later. It was our last known address and Fl. let them know we didn't register in Fl. so Ms. was charging us the sales tax. I called Ms. and told them we now live in Tx. They said fine, no problem and we had the option to register in Ms. or Tx, but we were going to have to register somewhere, and soon or Ms. would do whatever it takes to get the sales tax from us. We then registered in Tx and Tx. DF&W (or something like that) notified Ms. that we paid sales tax in Tx so everything is now la-de-da.
Actually I'm glad we resolved that problem because our boat is now up for sale and I know if I was a prospective buyer, I wouldn't touch a boat that had not paid taxes. It could turn out to be a nightmare.

[davefromoregon]

Anyone know the rules if the boat is purchased in Washington and taken to Oregon?

[xymotic]

Originally Posted by jeremiason

When you document you vessel with the USCG, the hailing port can be any geographical location in the US (OK there are some exceptions). A hailing port is used to identify the vessel, not really to show where it is from. For example, when we were living in San Francisco, there was a boat called the "Great Escape" with a hailing port of "Alcatraz Island, CA". As you probably are aware Alcatraz is the former Penitentiary and a National Park, and no one permently lives on the island.

What the USCG will do is ask you for a mailing address for your documentation and eventually notify that County in Florida that you have purchased the boat. Who will then start the process to tax you.

Just FYI, I bought a boat in Washington state, it used to be owned by a movie star so I made the homeport Hollywood.

I just got an inquisition from CA wanting to proof of purchase and payment of taxes. Boat hasn't had anything to do with CA except the hailing port for like 40 years.

[denverd0n]

There are three types of charges that you need to be aware of: sales/use tax, property tax, and registration fees. Sales/use tax is a one time payment due on the purchase of the boat. Property tax is charged every year and is normally based on the assessed value of the boat. Registration fees are also normally charged every year and in general are not a large amount.

As to Florida...

There is a 6% state sales/use tax, and most counties also charge 1% on top of that. If you buy and keep the boat in Florida you pay the full tax to Florida, unless you sign a document that says you will move the boat out of Florida within 90 days. If you buy a boat elsewhere and then move it to Florida, Florida will want the difference (if any) between the taxes you paid elsewhere and their taxes. If you buy it elsewhere, and keep it and USE it elsewhere for more than 6 months, then you will not owe Florida any sales/use taxes. You may be required to prove that you actually used it elsewhere, though. If you buy it somewhere else, let it sit for 6 months just to avoid the taxes, and then move it to Florida, the Florida tax man is going to want his pound of flesh--they are "on" to that particular dodge.

If you keep the boat in Florida for more than 90 days then you are required to register it here. The registration fee is very reasonable--less than $200 per year unless you have a mega-superyacht.

If the boat is USCG documented then you do not have to display Florida registration numbers on it (even though you do have to register it with the state). If the boat is not USCG documented then it must display Florida registration numbers.

Florida has no property tax for boats, so there is only the one time sales/use tax that may be an issue. There are some states that have no sales tax on boats, but they do have a property tax. Over the course of several years the property tax can add to far more than a one-time sales tax. There are a very few states that have neither sales nor property tax on boats. And then there are states that want both sales tax up front, and property tax year after year.

Below are links to all the details about Florida's sales/use tax, and registration requirements...
http://dor.myflorida.com/dor/forms/2011/gt800005.pdf
Official Website Florida Department of Highway Safety and Motor Vehicles

I wish there was one place with a current and comprehensive comparison of all of the sales/property/registration taxes for all states, but unfortunately there is not.

[tomfl]

Originally Posted by denverd0n

SNIP

As to Florida...

There is a 6% state sales/use tax, and most counties also charge 1% on top of that. If you buy and keep the boat in Florida you pay the full tax to Florida, unless you sign a document that says you will move the boat out of Florida within 90 days. If you buy a boat elsewhere and then move it to Florida, Florida will want the difference (if any) between the taxes you paid elsewhere and their taxes. If you buy it elsewhere, and keep it and USE it elsewhere for more than 6 months, then you will not owe Florida any sales/use taxes. You may be required to prove that you actually used it elsewhere, though. If you buy it somewhere else, let it sit for 6 months just to avoid the taxes, and then move it to Florida, the Florida tax man is going to want his pound of flesh--they are "on" to that particular dodge.


SNIP

From your link:

"The boat has been in use 6 months or longer within the taxing jurisdiction of another state, U.S. territory, or the District of Columbia. Time spent in foreign waters does not count as part of the 6-month period."

The OP posted he was considering going to the Bahamas for six months, something that would not qualify as use outside the state of Florida. The problem with trying to meet the six month requirement by using the boat in another state is running afoul of tax requirements in the other state.

The point is for someone who is buying a boat in FL and then sailing it up the East Coast just short of Canada and then returning to FL taking a little more than six months to do so might be an option but DOR would probably look closely at this. For someone who sailed to the American Virgin Islands and stayed there for five years and returned to FL there would be no question.

The real problem is the OP is a FL resident who seems to want to keep and use the boat in FL and is looking for a way to avoid paying the sales tax.

[Cheechako]

Anyone know the rules if the boat is purchased in Washington and taken to Oregon?
I dont know for sure, but I think there is no issue from Wa if you take it to Oregon. Oregon doesnt have sales tax, but they seem to have some expensive other taxes on real estate etc. Maybe they have a property tax on boats?

Bought a boat in Mary land, Documented the boat, stayed a little less than 90 days (and spent tens of thousands there!), moved the Boat to Flor ida. Stayed in Fl a little less than 90days (and spent thousands there!), Sailed to the Carribean for 3 years. Returned to Fl, took 1.5 years to sell the boat. Never paid state tax.
BTW, State of Washing ton will not let you title the boat there and pay sales tax unless the boat is physically there. (tried that 3 years ago!)
All in all though, if you're keeping the boat in FL, their tax rate seems pretty low compared with some others.

[In Training]

Clarification:

So, if you are a resident of New Hampshire and you purchase your boat, do not pay sales tax but pay property taxes each year -- 5 years go by and you have been in caribbean, area. You decide to move to Texas or Florida and move your boat there. Do you have to pay sales tax then? Even though 5 years have gone by?

[Cheechako]

Generally, if you move to a state, and want to title or register the boat there, you will need to show proof that you paid tax... somewhere. Let's say you paid 6% tax in Fl. then move to Washington and register the boat. Wa might ask for the differnce (Wa is about 8.9% tax) I've also heard some states might not ask for the difference... so not sure...

[Kettlewell]

Quite a few states do not require a sales or use tax on your boat if you bought and owned it out of state for some period of time prior to bringing your boat into the new state--usually at least six months or a year. Sometimes, your state of residency comes into play, like in New York. Basically, NY doesn't care about sales or use tax on your boat bought and owned out of state, but the minute you bring it into NY, if you are a resident, you owe the use tax, which is the same as the sales tax. However, if you bought the boat outside of NY while you were a resident of the other state, and then you keep it in NY you won't owe the sales or use tax to NY. Unfortunately, these laws vary from state to state, so there can be no blanket statement that fits everyone's circumstances. I believe denverd0n had the best summary of the Florida law. One thing to watch out for is that I have found local officials are not always accurate with regard to their own laws, and it is worthwhile to do your own research and make copies of applicable laws and forms. Don't depend on some country clerk to know the intricacies of boating taxes and registration.

[jahillsr]

I know that here in Mass there has been a hullabaloo about MA State Senator John Kerry had a $7mm sailboat made for him in New Zealand by a company in Rhode Island and then claimed RI for it's port to avoid sales tax on the purchase, no yearly excise tax, as well as no tax on marine services while in RI. The problem came about because the boat isn't allowed to come into MA for 6 mos if you are a MA resident, or it gets taxed in MA. Unfortunately for him, the 4th of july came prior to the 6 months window being up and he need to show off his new boat in Nantucket ... and got bagged by the DOR. The man that has never met a tax increase on others he wouldn't vote for, has been pulling everything he can to avoid paying all the taxes. If you are not a member of Congress, try to find a State that works for your unique circumstances. Kerry would have been OK sailing off of the Cape during the summers while keeping it domiciled in RI if it wasn't for his ego ... .

[dgasmd]

Originally Posted by denverd0n

There are three types of charges that you need to be aware of: sales/use tax, property tax, and registration fees. Sales/use tax is a one time payment due on the purchase of the boat. Property tax is charged every year and is normally based on the assessed value of the boat. Registration fees are also normally charged every year and in general are not a large amount.

As to Florida...

There is a 6% state sales/use tax, and most counties also charge 1% on top of that. If you buy and keep the boat in Florida you pay the full tax to Florida, unless you sign a document that says you will move the boat out of Florida within 90 days. If you buy a boat elsewhere and then move it to Florida, Florida will want the difference (if any) between the taxes you paid elsewhere and their taxes. If you buy it elsewhere, and keep it and USE it elsewhere for more than 6 months, then you will not owe Florida any sales/use taxes. You may be required to prove that you actually used it elsewhere, though. If you buy it somewhere else, let it sit for 6 months just to avoid the taxes, and then move it to Florida, the Florida tax man is going to want his pound of flesh--they are "on" to that particular dodge.

If you keep the boat in Florida for more than 90 days then you are required to register it here. The registration fee is very reasonable--less than $200 per year unless you have a mega-superyacht.

If the boat is USCG documented then you do not have to display Florida registration numbers on it (even though you do have to register it with the state). If the boat is not USCG documented then it must display Florida registration numbers.

Florida has no property tax for boats, so there is only the one time sales/use tax that may be an issue. There are some states that have no sales tax on boats, but they do have a property tax. Over the course of several years the property tax can add to far more than a one-time sales tax. There are a very few states that have neither sales nor property tax on boats. And then there are states that want both sales tax up front, and property tax year after year.

Below are links to all the details about Florida's sales/use tax, and registration requirements...
http://dor.myflorida.com/dor/forms/2011/gt800005.pdf
Official Website Florida Department of Highway Safety and Motor Vehicles

I wish there was one place with a current and comprehensive comparison of all of the sales/property/registration taxes for all states, but unfortunately there is not.

Thanks to you and others for the very concise, short, to the point advice and education. A lot of what has been discussed here, as basic as some of it may be, was very new to me. I have a much better idea now of what is it that I need to do, and what kind of expense I will be making.

[cfarrar]

The problem came about because the boat isn't allowed to come into MA for 6 mos if you are a MA resident, or it gets taxed in MA.

My understanding (from personal experience) is that Massachusetts will send you a bill for 6.25% use tax if you bring a boat into their waters. It doesn't matter how long it's been out of state, and it doesn't matter if you only visit MA for one day. If you use your boat in their waters and they find out (with a sales receipt, for example), they'll send you a bill. Any sales tax already paid in another state will offset the MA use tax.

[twistedtree]

Originally Posted by saw77

I'm in the process of buying a boat that is a documented. I live in MA and the boat is in ME, but the current home port is listed as MA in the USCG database. The broker told me that I will have to pay tax in ME, but since I am not a resident of ME I pay a lower rate. I will not have to register the boat in Maine though, since it is USCG documented.

My guess with respect to the OP is that it will depend on the state, they all have their own rules. I would think that the broker who handles the sale should be able to give you some information.

You should check that carefully. I believe that if you are a MA resident and promptly move the boat from ME to MA, you are not liable for ME sales tax. But you will owe MA sales tax. At least that's how it worked when i bought a boat in ME as a MA resident.

[hellosailor]

cheechako-
And you never got an enquiry from either state tax department, asking you to explain why a boat that was USCG homeported in that state was exempted from sales tax there? A lot of tax departments just would send you a bill saying "our records indicate" and then giving you 90 days to either explain yourself to their satisfaction, or pay up.

[saw77]

Originally Posted by twistedtree

You should check that carefully. I believe that if you are a MA resident and promptly move the boat from ME to MA, you are not liable for ME sales tax. But you will owe MA sales tax. At least that's how it worked when i bought a boat in ME as a MA resident.

I'm sure that's the case but I'll be keeping the boat in Maine. My vacation cottage on the water.