Purchase tax, laws, and state stay time questions

[dgasmd]

As I get closer to the purchase, I can't help it to notice the multiple lines in ads in Yachtworld from brokers stating that if you buy in NC from out of state you pay no sales tax or the same from FL if only stay 180 days or less. How does that really work?

I am all for tax avoidance, but not for tax evasion. Big difference, and I hope everyone can see that. In other words, if I can legally get away with not paying more for something (taxes), then I will. I don't think there is anyone that can say they love to pay more and pay for taxes if they could help it. Doing it illegally IS NOT an option. I know I am not alone!

OK, os to the specific questions. I live in FL, but I will be looking at boats likely as far north as NC on the east coast and along the gulf and caribbean as well if needed. So, if I buy a boat outside of FL, then I don't pay taxes in that state right? But do I have to pay them in FL (at FL rates) when I come back to register the boat here (will be USCG documented too)? What if the boat spends 180 days or more outside of FL but it is registered in FL when I buy? Like, let's say I buy the boat in FL or NC, want to register it in FL, but it will spend 180 days or more outside of FL in the Bahamas?

I think you can see where I am going with these questions. Any guidance or help would be appreciated. I did do a search, but it did not answer my questions.

[tomfl]

My understanding is that the Bahamas (and other foreign countries) do not count as out of state according to the Florida tax law. Out of state means out of the state of Florida but in the US. You should also have some proof, like marina and/fuel bills from the state you claim the boat was in.

A real world example might buy buy a boat in NC or FL in the spring. Sail it up the East Coast to NE and stay there for the summer then South to GA and over to the Bahamas (you might get away with a quick trip through Florida) for a few months. All this you can probably do with USCG documentation as long as you don't say in some of the NE states too long.

After a year of sailing bring the boat back to FL and register it there. I know about the 180 day thing, but if you cut it close the FL DOR may take a close look and question your intent.

FL DOR wants to collect as much sales tax as possible but it also wants to collect as much revenue as possible from legit out of state boaters who register their boats in FL. So what you have to do is establish yourself as a legit out of state boater, something you do not really seem to be.

[dgasmd]

Originally Posted by tomfl

My understanding is that the Bahamas (and other foreign countries) do not count as out of state according to the Florida tax law. Out of state means out of the state of Florida but in the US. You should also have some proof, like marina and/fuel bills from the state you claim the boat was in.

A real world example might buy buy a boat in NC or FL in the spring. Sail it up the East Coast to NE and stay there for the summer then South to GA and over to the Bahamas (you might get away with a quick trip through Florida) for a few months. All this you can probably do with USCG documentation as long as you don't say in some of the NE states too long.

After a year of sailing bring the boat back to FL and register it there. I know about the 180 day thing, but if you cut it close the FL DOR may take a close look and question your intent.

FL DOR wants to collect as much sales tax as possible but it also wants to collect as much revenue as possible from legit out of state boaters who register their boats in FL. So what you have to do is establish yourself as a legit out of state boater, something you do not really seem to be.

Thanks for the reply. Let me address the last part first and then I'll go on with the rest. Although I applaud the efforts of the FL DOR, my efforts are equally as strong or stronger to avoid spending more than the bare minimum I have to, so I have no reservation in legally exercising my rights. The boat may be co-owned by someone else that is from another state (land locked state) as well.

My question may reflect a lot of ignorance about how the entire USCG documentation and state registration works. If I read your reply above well, am I to understand that one does not have to register the boat in a particular state if it is USCG documented? I thought part of the registration requirement was to assign a port of origin to the vessel, but then again, I see boats with ports like Colorado, UT, and Montana in FL all the time. So, if someone from Indiana buys a boat in FL, does the USCG documentation at the time of purchase with the boat sitting in FL waters and does not spend more than 180 days/year in FL for the first year they don't have to pay sales tax in FL or Indiana? Also, by what you say, if you have a vessel that was bought a year or more ago and taxes were not paid, for whatever reason, and you come to register it in FL then you don't have to pay the sales tax that was never paid originally despite the boat being sold in FL in the first place?

Don't see my comments or questions as an argument. I am trying to learn here. If you have something constructive to teach me, by all means don't hold back.

[jeremiason]

I bought my boat in California and paid California tax on it, but my new home of record is Florida. I got a little worried, since we will be arriving in Florida next summer.

I found this on the internet last summer. It is a Florda State information letter concerning Boat Taxes.

It looks like, since you are a Florida resident you will eventually pay Florida Use Tax on the boat, minus any taxes paid to another state. The cap on tax in Florida is $18k.

Florida says if your boat is in the state 90 consecutive days or 183 days during a year, you are subject to use tax paid to the local County Tax Assessor.

[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.

[tomfl]

General stuff.

The home port for a USCG boat can be almost anywhere the owner wants. I think it has to be somewhere on earth but the owner can pick the location out of a hat. It use to be a big joke to use Havana as a home port since there is a small town just North of Tallahassee, Fl named Havana. If you have never been there you should know locals pronounce the name Hey Vana like they were talking to the babe on Wheel of Fortune.

There is a difference between a sales tax (6% Florida state tax and depending up to 1% county sales tax) and a use tax imposed by the state but collected by the county so it can be different in different counties.

The sales tax is only paid when the boat is sold but the use tax is paid each year if the boat is in Florida for a certain time length for that year.

There is the thing about 180 days, but the law also allows for intent to be considered by DOR. If they think you are messing around they can assess taxes and interest.

As I posted earlier DOR wants to collect taxes and entice legit out of state boaters to come to Florida. There is a somewhat common tactic of forming a corporation in DE (or some other state) having the corporation buy the boat, register the boat in DE, document it with the USCG, and move it in and out of FL to avoid the 180 day thing. DOR is aware of this and the law says something if the guys using the boat or officers in the corporation living in FL you have to pay the sales tax. DOR will go after you for this.

The most common advice I have seen on this topic is hire an accountant to answer your questions. The rational for this is that if you think it costs too much to hire an accountant you will probably not save enough money to worry about paying the sales tax. Also keep in mind that DOR can impose fines as well as the tax if they think you are trying to fool them

I am all for paying as little tax as possible, but sometimes you can be penny wise and pound foolish.

[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.

[tomfl]

Originally Posted by saw77

SNIP
I would think that the broker who handles the sale should be able to give you some information.

I was looking at a boat in FL and the broker never mentioned anything along these lines till I asked about setting up a corp in DE at which point he said something along the lines of "if you want to go that way I know a girl in Miami who can handle all the paperwork". The broker may get a finder's fee from the girl. Doing a google search would probably turn up services.

The OP already knows some of the theory and rules. The thing is the DOR also knows this as well and is on the look out for folks who come too close to the line.

[jeremiason]

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.

States all want their tax money. They receive reports of sales from the USCG and DMVs. They also receive berthing reports from marinas on the whereabouts of boats.

The sales tax is normally paid at the point of sale, unless the vessel is removed from the state in a period of time, usually 90 days, depending on the state.

In the San Francisco Bay area that really sucked, because the sales taxes vary almost 2% between the different counties. So buy a boat on one side of the county line or the other could cost you, like the difference between MA & ME.

Keeping your boat in Maine will exempt you from MA sales & use taxes, but you will still be subject to annual Maine Excise Tax.

[saw77]

Originally Posted by jeremiason

States all want their tax money. They receive reports of sales from the USCG and DMVs. They also receive berthing reports from marinas on the whereabouts of boats.

The sales tax is normally paid at the point of sale, unless the vessel is removed from the state in a period of time, usually 90 days, depending on the state.

In the San Francisco Bay area that really sucked, because the sales taxes vary almost 2% between the different counties. So buy a boat on one side of the county line or the other could cost you, like the difference between MA & ME.

Keeping your boat in Maine will exempt you from MA sales & use taxes, but you will still be subject to annual Maine Excise Tax.

I knew most of that since I keep my current boat in Maine. But I was living there when I bought that one, so what was surprising (pleasantly) to me was finding out that since I'm out of state now I only pay 2% sales tax, instead of (I believe) 5%.

[Cheechako]

If you buy the boat and then take it to the Bahamas prior to the length of stay limit, you can avoid the state tax. Assuing you document it only) If you put it for sale when you return, you can still avoid it.

[S/V Illusion]

Originally Posted by dgasmd

OK, os to the specific questions. I live in FL, but I will be looking at boats likely as far north as NC on the east coast and along the gulf and caribbean as well if needed. So, if I buy a boat outside of FL, then I don't pay taxes in that state right? But do I have to pay them in FL (at FL rates) when I come back to register the boat here (will be USCG documented too)? What if the boat spends 180 days or more outside of FL but it is registered in FL when I buy? Like, let's say I buy the boat in FL or NC, want to register it in FL, but it will spend 180 days or more outside of FL in the Bahamas?

Lots of mis-information which is nothing new here...

Check with the Fl Tax Collectors Office to verify current policies but
I'm sure you will find you need to register the boat in Florida based on your desc and pay the sales tax here (in florida) unless you can demonstrate to them you paid it elsewhere and you stay in Fl less than 90 days.
It makes no difference if you document the boat. Fl tax is still required.

[hellosailor]

dga-
" if you buy in NC from out of state you pay no sales tax " AFAIK they are referring to NC state laws that do not require the broker to collect sales tax when a boat is going out of state. In some states, the broker is apparently required to collect sales/use tax at the time of sale, and to remit it to the appropriate authority, regardless of where the boat is headed. (I think a member from Wisconson remarked about that problem.)

But that doesn't mean you'll NEVER pay sales or USE tax, it just means you won't pay SALES tax at the time/point of sale. AFAIK.

In most US states, either you pay sales tax at the time of purchase, or you pay use tax when you register the boat back home, OR if you fail to pay use tax within xx days of the purchase of a boat out of state? They hit you for back taxes, penalties, and interest if the boat EVER comes back to your native state.

Someone posted their problem with that 2-3 years ago, when he had purchased & kept aboat out of state for some 20 years, and then brought it back home to NY, where he had legally been a resident for all those years. That's right, the state said he shouldhave paid use tax when he first bought it, and wanted 20 yeras of penalties and interest. (Never did hear back from him on the outcome.)

Bottom line? Ask you tax authorities. Get it in righting. Brokers have been known to be wrong before, and there's a rumor some of them have actually lied.

[bchaps]

This subject totally exasperates me....

Every taxing authority is looking for revenue... and searching through Coast Guard Documentation is just another method of grabbing more bucks. I am a Pennsylvania resident, but purchased and berth Charbonneau in NC. Wouldn't you know, this past Spring I received a politely threatening letter from the state of PA saying "pay up now!" I explained to the agent I live in Mountain Top, PA (about 2000 feet above sea level) and if my vessel ever gets to that location, global warming has really gone rampant.... She didn't have a sense of humor either.

Then, I politely explained a 40' sailboat is not trailerable and will never sail on PA's beautiful, but very shallow Susquehanna River. To end her money demands, I asked what must I do to prove that PA has no legal recourse to this money? I was required to submit copies of my Marina contract beginning with the purchase month through the current month. Talk about "Guilty until proven innocent"! To get a bureaucrat off my back, I complied.

Interestingly, coastal South Carolina has taken a bold step of not only allowing 180 days tax free, but actually promoting it! At last a state that applies some business sense! Their web site suggests when you leave the Bahamas, come to SC...we have the Marinas and talent to care for your vessel!!!! Yeah, if you stay more than 180 days, we're going to tax you, but if you're returning to the Bahamas each year and keep the boat outside SC for 180 days, you can stay here tax free! Wow! Don't you think that will attract some of the Bahama bound... and raise SC revenues through sales taxes.

While in Marathon, FL several years ago, Richard, the Dock Master shared that Town Council only saw the 300 boats floating in the harbor as taxable subjects and never considered the $1,000. average spent each month by each boat. We dropped a small fortune there...fuel, restaurants, car rental, and on and on. But most governments are only interested in grabbing more and totally overlook the massive benefit of selling their beautiful environment and boater friendly location. Bureaucratic idiots! I give President Clinton credit for having the quiones to tell congress to back of their proposed usage tax on a fledgling internet... he told them let it grow before you stifle it with taxes. Congress...more bureacratic idiots.

Sorry for the rant, but I feel better now...
Bill

[tomfl]

Guys, the OP lives in FL and is considering buying a boat in FL, along with some other states; at which point he would bring the boat back to FL where he lives. Under these circumstances it is easy to understand why the FL DOR thinks he should pay sales tax and register the boat in FL.

FL state sales tax is 6% and in some cases counties will add an additional 1% or so sales tax. FL sales tax on boats maxes out at $US18,000 if 6% of the purchase price is greater than that. If a FL resident (like the OP) buys a boat out of state and pays sales tax in that state the full amount is deducted from the FL sales tax.

If the boat is bought in FL and is taken out of the state within a certain time period the FL sales tax can be avoided. Of course taking the boat out of FL may subject it to taxes in the place where it is taken. Problem for the OP is that he lives in FL and wants to keep the boat in FL.

Since the OP said he has an out of state friend who may act as the de jure owner it would probably be easy to avoid the FL sales tax that way, but the boat would be subject to taxes in the state where his friend lives.

And that is the real issue, state governments will impose a sales tax or a property tax or both. If the boat is used in a state for 180 days a year (sometimes less) states will also expect the boat to be registered in that state. If you are a real cruiser that moves around enough that you are not in a state too long you can get away with registering the boat in a low cost state (often times a land locked state that the boat will never physically be in). But if you live in Florida and intend to keep the boat in FL you really have to jump through hoops to avoid paying tax and even then the DOR may come looking for you if they think you are trying to pull a fast one.