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paradisenwfl · 14-06-2017, 19:08

I have heard that you can reduce the sales tax on a boat by deducting the cost of the various items on the vessel that already have had tax paid on them - or something like that. I can't seem to find anything on the internet about this.

Anyone have more info on this?

Calif.Ted · 14-06-2017, 19:42

I have not heard that and it seems most unlikely, everything on the boat has already had some type of sales tax applied to it everytime it's changed owners hasn't it ?

cpt_757 · 14-06-2017, 20:37

Me, neither, They always charge straight sales tax, never happened here in CA.

Zven · 14-06-2017, 21:23

That sounds like what can happen if a company owns a boat. Assuming the company is VAT registered, the VAT on sales and purchases will be offset against each other and any balance paid to the state (or refunded if negative).
Well that's the system in Europe anyway, for the most part. I would not know about other parts of the world.

hafa · 14-06-2017, 21:59

In the US, sales tax (as differentiated from VAT tax) is a typically a straight percentage of the amount of the sale:

Florida
California
Washington

If the sale is for a large amount, it is advisable to consult with a qualified tax attorney in your local jurisdiction.

CSY Man · 14-06-2017, 23:20

If the boat is owned by an LLC, there is no sales tax.
Ask the owner to establish an LLC, transfer the boat to the LLC, then buy the LLC, not the boat. Total cost can typically be $100 for the above, then save $10,000 on sales tax.

hafa · 14-06-2017, 23:32

Quote:

Originally Posted by CSY Man

If the boat is owned by an LLC, there is no sales tax.
Ask the owner to establish an LLC, transfer the boat to the LLC, then buy the LLC, not the boat. Total cost can typically be $100 for the above, then save $10,000 on sales tax.

I'd be very careful of this, as it's an immediate audit flag in many places, especially given the timing proposed. Transfer of LLC assets is subject to capital gains as well as long and short term asset accrual. More information.

Once again, if the transaction is substantial, it's in your best interests to engage the services of a local qualified tax attorney, or, at the very least, consult with a CPA.

belizesailor · 15-06-2017, 04:19

Sales Tax is very venue specific. Without knowing venue you cant answer with details. Where do you plan to buy the boat?

paradisenwfl · 15-06-2017, 06:19

Thanks for all the replies. I am purchasing the boat in Florida and am not going through a broker. I am a Florida resident.

An example of what I'm referring to is if the previous owner purchased a new solar system, then when the boat is sold the taxes on the boat can be reduced because of the solar system. Perhaps because taxes had already been paid on the solar system?

I talked with someone at a Documentation Agency and was told that it's possible to reduce taxes on a boat due to additions, but that they couldn't tell me about it!

CSY Man · 15-06-2017, 06:38

Quote:

Originally Posted by hafa

I'd be very careful of this, as it's an immediate audit flag in many places, especially given the timing proposed. Transfer of LLC assets is subject to capital gains as well as long and short term asset accrual. More information.

Once again, if the transaction is substantial, it's in your best interests to engage the services of a local qualified tax attorney, or, at the very least, consult with a CPA.

Sure, it can go bad if somebody tries to cheat on taxes.
I had LLCs for years and had no tax problems.
Recently I transferred ownership of my Documented vessel to a single asset LLC.
If I sell the LLC, there is no sales tax on the boat.
If you want to make money chartering the boat, you certainly need to decleare the gains, or the loss.
My CPA has been happy with what I am doing, so has the IRS, and my lawyer who assisted with setting up the LLC.
I am not giving tax advice, but I now for sure that whoever buys my boat in Florida will not pay sales tax.

Capt Phil · 15-06-2017, 06:55

I would be inclined to heed hafa's warning. I bought and sold several vessels in CA in the 80's and 90's and got to know the Franchise Tax Board better than I ever wanted to.
They came after me on a boat that I purchased in Washington State about 9 years after I purchased it. I had spent about 6 months in Canada with the boat immediately after purchase but because I had an empty slip in San Diego, I had to prove that I didn't move the vessel to CA within the permissible 3 month period after purchase. I was forced to travel back to Canada and request receipts from marinas, fuel docks and chandleries where I had done business 6-7 years before. Not an easy nor cheap excercise! Some had changed ownership or gone out of business but sufficient number were still around and willing to issue a receipt to finally satisfy the Tax Board. Because we were cruising in some of the more remote areas on the British Columbia coast, it was particularly difficult to get to some of these locations. The CA Franchise Tax Board frankly didn't give a **** and were really hard to do business with. I have since moved out of state and moved my business to Mexico where I sold it for a good profit. Now retired, .I learned my lesson to research carefully the tax implications of any state where I would plan to do business or buy and sell anything. Phil

belizesailor · 15-06-2017, 07:49

I agree on the tax issues, Ive lived in FL and been involved in a number of boat transactions (both mine and others) and never heard of such.

I suspect any meager savings resulting from such will not be worthwhile in actual dollar amount or in terms of potential tax issues risk.

Go to the source for correct and current info: contact tax authorities in FL.

In the past, you could buy a boat in FL totally sales tax exempt if it was being placed into charter service in FL, but I dont know the status of that law now.

Tingum · 15-06-2017, 08:16

I believe you may be thinking of the Fla law for smaller boats that allows the outboard engines to be sold separate from the hull. Doesn't work for inboards.

Pirate007 · 15-06-2017, 08:22

This may help some folks out.

""Thanks to the Protecting Americans from Tax Hikes, or PATH, Act of 2015, the sales tax deduction became a permanent tax break for people who itemize deductions.
The sales tax deduction is particularly welcomed by taxpayers in states that do not collect income taxes but do levy state sales taxes. It also could benefit taxpayers who face substantial local sales taxes. Even some residents of states with both types of taxes might find the sales tax deduction is more valuable to them than the income tax write-off.""

Also check IRS: https://www.irs.gov/credits-deductio...ting-sales-tax

It worked for me.