TAX - Buying a sailboat in California (San Diego) out of state

[Ruso]

Dear fellow sailors,
The subject was beaten to death in some old threads but I want to refresh the latest status.
I am in AZ trying to buy a boat in California. Leaving aside how crooked the CA - I know it from first hands living there before for a 15 years.
Now to the subject...
Talking to to Paul who attorney in
https://www.manta.com/c/mmltv8t/law-...aul-s-trusso-a

1. Private party transfer, even out of state not sheltering a purchaser from "use tax" - I called it sales tax but from correct terminology is "use tax". You have to pay 7.5% (San Diego county). Doesn't mater where you plan to register your boat after purchase. Of course you liable for annual "Property" tax if you boat stays in CA and you better to have evidences when and where your boat was moved from CA waters if you do so.
2. Another option (around $2000 + various expenses for going out of 3 mile out - is not cost effective my purchase price range) is "offshore delivery". After competing the transaction you have 6 month to move the boat out of CA waters and not come back for another 12 month.

[john61ct]

Yes, you are required to pay the tax.

Why is that so hard?

[zeehag]

your sales tax is 8.75 percent in san diego, yup. must be paid. they will get you for it . loophole---take out of country immediately and store in mexico for a year. arnie baby made the 90 day yacht club a 365 day yacht club.

[Ruso]

Originally Posted by john61ct

Yes, you are required to pay the tax.

Why is that so hard?

Assuming rhetorical question giving my Tax accountant rhetorical answer
"This is just money.."

[Ruso]

Based on info I got talking to the attorney it is 7.75

Originally Posted by zeehag

your sales tax is 8.75 percent in san diego, yup. must be paid. they will get you for it . loophole---take out of country immediately and store in mexico for a year. arnie baby made the 90 day yacht club a 365 day yacht club.

Loophole is "offshore" delivery - not just take the boat overseas. Taking out of California helps to avoid "property tax"

[sainted]

Why would offshore delivery be $2000? It's not at all hard or that time consuming. I've done it.

Here's how it works:

Specify that the vessel is to be delivered off-shore in the sales contract (very important).

Take the vessel to Ensenada. Plan to keep it there for a year. Have some work done at Baja Naval, like a bottom job or whatever.

Send a copy of the sales contract and proof that the vessel in not in Cali, such as a receipt from Baja Naval or the marina you're keeping the boat in, to the State Franchise Tax Board to prove you took possession of the vessel off shore (out side of the state) and immediately went to Mexico.

If you really want to document the hell out of the transfer, video tape it and make sure you get the lat/lon in the video, but I didn't do that. I just got on my new boat, sailed under the Golden Gate and turned left.

That's all there is to it.

The brokers in San Diego (or anywhere south of Point Conception) should know exactly what to do. They do it all the time.

Scott

[Paul L]

After doing an 'offshore sale' and keeping the vessel out of Cal for a year, what happens when the boat reenters Cal. Is use-tax now due, or only property tax?

[carlheintz]

When you come back, nothing will happen... until the harbor patrol notes you don't have Calif decals on the boat and cites you, sending a copy to the Franchise Tax Board. Then all hell breaks loose and you have two agencies after you.

My suggestion is to pay the $#@$%^ tax and consider it a cost of doing business in the golden state. ( It's called golden because they take all your gold)

[bradfordharley]

I used Paul when I bought my boat and was very satisfied; his options are accurate from all my research.

It all depends on your long term plans, what your costs will be.
1–offshore delivery and out of country for a year. Mexico is great.
2. Pay tax.
Note—. If you bring your boat into California and are in a marina, they will report that and the state will come looking for property tax. There are stipulatuons(they are online) for how long your boat can be in Cali without paying property tax
There is no free lunch. Pay the tax man or leave the us.

[Ruso]

Originally Posted by sainted

Why would offshore delivery be $2000? It's not at all hard or that time consuming. I've done it.

Here's how it works:

Specify that the vessel is to be delivered off-shore in the sales contract (very important).

Take the vessel to Ensenada. Plan to keep it there for a year. Have some work done at Baja Naval, like a bottom job or whatever.

Scott

Scott,
I don't see how anyone can enter into Mexico having the sales contract signed without state registration or USCG certificate. Obtaining (fastest) state(any) registration is at least few days deal... The boat has to be back in the port and well documented it was not in "pleasure" use. Correct? Now... You got the state registration and taking the boat offshore trip to Mexico - first 3 miles miles has to go with hired captain for "offshore" passage preferably you meet your boat outside of the 3 mile zone. No?

[Ruso]

I guess it $2000 because someone wants to have attorney protecting his interests with ( the attorney and his stuff) collected evidences against the state sponsored tax racket. An attorney time cost money. For my purchase price $30-40K Paul suggested just pay the tax and get out. Saving couple thousand with the offshore delivery is not worth it.

[john61ct]

I think can register in CO by mail?

[Ruso]

Originally Posted by john61ct

I think can register in CO by mail?

Mail or in-person it takes time and the boat sitting in the CA slip is potential excuse to demand the "use" tax. This is a good reason to have an attorney which deals with all those predicaments..

[Montanan]

Originally Posted by Ruso

Dear fellow sailors,
The subject was beaten to death in some old threads but I want to refresh the latest status.
I am in AZ trying to buy a boat in California. Leaving aside how crooked the CA - I know it from first hands living there before for a 15 years.
Now to the subject...
Talking to to Paul who attorney in
https://www.manta.com/c/mmltv8t/law-...aul-s-trusso-a

1. Private party transfer, even out of state not sheltering a purchaser from "use tax" - I called it sales tax but from correct terminology is "use tax". You have to pay 7.5% (San Diego county). Doesn't mater where you plan to register your boat after purchase. Of course you liable for annual "Property" tax if you boat stays in CA and you better to have evidences when and where your boat was moved from CA waters if you do so.
2. Another option (around $2000 + various expenses for going out of 3 mile out - is not cost effective my purchase price range) is "offshore delivery". After competing the transaction you have 6 month to move the boat out of CA waters and not come back for another 12 month.

This is all straightforward and customary. So not a big deal or a hassle.

Where do you intend to keep your boat? California or Mexico, or elsewhere?

Your profile says looking for a boat in San Carlos, Mexico but it sounds like you purchasing a Cali boat. It seems safe to assume you are not going to use it in Arizona.

If it is to be kept in California then it needs to be registered in California which will invoke use tax since you are dealing with a private party transfer there will not be sales tax as would be the case if you were purchasing from a dealer [i.e. a person who sells several boats each year]. Use tax will be due upon registration. The rate is dependent on where the boat will be located as there is state and local use taxes applied and the amount of local taxation varies by specific site. If you intend to promptly take the boat out of California then you can obtain a use tax waiver because, well ya aint gonna use it in Cali, duh. You could consider Mexico but that would be a PITA if you intend to be in beautiful California.

Reference the link below to determine the specific use tax rate applicable:
https://www.cdtfa.ca.gov/taxes-and-f...-tax-rates.htm


Also property taxes will be charged by the county jurisdiction which applies to where the boat is kept. You will provide such situs data when the boat is registered so that the assessor can make the value determination and send you the bill.

Question: Why are boats and vessels assessed for property taxes?
The California Constitution (Section XIII, Article 1) provides that all tangible property is taxable unless it is otherwise exempted by the Constitution or by the legislature. Household personal property was exempted in the 1950's, but privately-owned boats are still subject to property tax.

Property taxes for boats are not collected through the registration fee, as they are with motor vehicles. Where automobiles are concerned, DMV registration fees do include both a registration fee and also what is known as an in-lieu fee for property taxes that is returned to local government in-lieu of a property tax assessment by the assessor. Though it may seem like you are being doubly-taxed, that is not the case.

A documented vessel is assessed for property taxation at the "place of documentation" if documented by the USCG unless it is kept elsewhere and notice of this fact has been sent to the Assessor of the county in which it is documented. Temporary absences of a few months duration would not affect the situs of the vessel.

Liability for vessel property taxes attaches to its owner as of 12:01 a.m. on January 1 each year (the lien date). The bill for the coming tax year is then issued to the owner of record at that time, and that individual is liable for the taxes even if the boat was sold soon after that date. Where the boat was sold just before the lien date (December 30, for example), the new owner would be liable for the new bill.



Generally, every sail-powered vessel over eight feet in length and every motor-driven vessel (regardless of length) that is not documented by the U.S. Coast Guard which is used or on the waters of this state are subject to registration by the Department of Motor Vehicles (DMV). The vessel must be located in California.

Vessels previously registered in other states must be registered in California within 120 days of being brought into the state, if it will be used upon California waterways the majority of the 120 day time.

The term vessel applies to every description of water-craft used or capable of being used as a means of transportation on water, except the following:

A seaplane on the water.
A watercraft specifically designed to operate on a permanently fixed course and guided by a mechanical device that restricts the watercraft's movement to the fixed course.
A floating structure that is designed and built to be used as a stationary waterborne residential dwelling, which, (a) does not have and is not designed to have a mode of power of its own, (b) is dependent for utilities upon a continuous utility linkage to a source originating on shore, and (c) has a permanent, continuous hookup to a shoreside sewage system.
The following vessels do not have to be registered in California:

Vessels propelled solely by oars or paddles.
Nonmotorized sailboats that are eight feet or less in length.
Nonmotorized surfboards propelled by a sail and with a mast that the operator must hold upright.
A ship's lifeboat (a dinghy is not a lifeboat).
Vessels currently and lawfully numbered (registered) by another state that are principally used outside California.
Vessels brought into California for racing purposes only (exempted only during races and tune-ups).

Enjoy your new boat and happy sailings.

[Ruso]

Thank you Montanan, My plan.. so far or one of the possible plans..
1. Make private party transaction - get bill of sale - run out of CA collecting all gas receipts as evidence.
2. Register the boat in the AZ (no AZ tax on private party transfer)
3. File USCG, travel to CA and RUN the boat out to Ensenada even hiring shipper to get her out of CA 3 mile line.
I can continue to my work from anywhere as long as I have internet and phone. Ultimate goal is deliver the boat to Sea of Cortez San Carlos. I just don't see anything worthy in La Paz or San Carlos - not for listed price.. Most of the boats there just left on hard because they not qualified anymore to sail back to US without serious investment...Out of 10 listed in my price range - 9 is fixer uppers..
Waiver is interesting concept.. could you elaborate on it more? I was thinking along this line sending letter to CA tax authorities outlining my plans and asking for reply letter.