California Tax Question on Boat Purchase

[webejammin]

We purchased our documented boat off shore San Diago 3 miles using a licenced captin ( a requirement and pic's of lattitude and longitude on a GPS with a new newspaper with it's date for evidence) last fall and sailed our boat to WA state. About 3 months of re-documenting and re-naming our boat we paid our state tax we got a call from the California property tax folks and I just sent them a copy of the receit where we paid taxes in Washington state and never heared from them again. With states being broke they want to collect all the taxes they can with no loop holes if your going to keep the boat in the US. Electronic data bases are easy for states to check and collecting is like piracy with a licence. We don't have state numbers but have to display on the bow a WA state yearly sticker.

[savoir]

Every broker in CA knows the offshore sale procedure. I did it so it can't be too hard. I had to pay the skipper though.

[Jerry Woodward]

Can you elaborate on the offshore sale procedure? Does this really allow one to avoid the CA sales tax if one is keeping the boat in CA?

[savoir]

No. You have a set time to remove the boat from Calfornia which was 90 days when I did it.

[Capt Phil]

Be Careful! Be very, very careful... Capt Phil

[Dennis.G]

Originally Posted by Capt Phil

Buy her taking offshore delivery, head south past San Diego with your first port of call being Ensenada, MX. Berth her there for over 90 days then cruise back to San Diego ...

This information on use tax is old and laws have changed. No longer 90 days. In addition to taking off-shore delivery, you need to be out of state at least 6 months out of following 12 months. That is only part of it. You need to prove that intent was to keep and use boat outside of Calif. One common catch: Leasing a slip in California will indicate that you intend to move boat back to Calif and they will get ya for the use tax.

If you are a California resident expect a use tax bill after purchase. It will be up to you to prove that that tax is not due. Guilty till proven innocent.

California yacht brokers are pretty much aware of the rules and can help. There are law firms that handle this on a regular basis.

[zeehag]

you must keep boat out of kali for one full year, then bring her back if you plan on keeping it in kali. that was one of the last things arnie did before he left orifice as governator.

[webejammin]

Originally Posted by zeehag

you must keep boat out of kali for one full year, then bring her back if you plan on keeping it in kali. that was one of the last things arnie did before he left orifice as governator.

Persionally I would leave Cal waters to moor your boat, the tax folks called and sent letters and I finally sent them a copy of where I payed my 8.6%sales taxes in WA state and they quit calling. I guess Cal is trying to pay for there illegal alians that live off the state . In WA state if you moor your boat or sign a morrage lease for any length time after purchase you have to pay taxes. Our yearly sticker is $450 for our $98,000.00 boat too high but we live here and is due last of June.

[Dennis.G]

Originally Posted by webejammin

.... Our yearly sticker is $450 for our $98,000.00 boat too high but we live here and is due last of June.

Would be at least twice that in California (general tax rate of 1% plus any county special assessments or bond payments).

Smile - you are getting off cheap.

[webejammin]

Originally Posted by Dennis.G

Would be at least twice that in California (general tax rate of 1% plus any county special assessments or bond payments).

Smile - you are getting off cheap.

[J_m]

Like others have said, if you have a residence in CA, they will likely try and collect from you. If the boat is documented, they will find out and send you a bill. Even if you demonstrate that you registered and payed in another state ( in our case WA also) .. they may ask you to also prove that you NEVER brought the boat into CA waters and ask for Marina slip receipts, fuel records, repair records etc .. keep good records and be ready to provide them. The state is broke and looking for revenue.

[Jerry Woodward]

Originally Posted by webejammin

Persionally I would leave Cal waters to moor your boat, the tax folks called and sent letters and I finally sent them a copy of where I payed my 8.6%sales taxes in WA state and they quit calling. I guess Cal is trying to pay for there illegal alians that live off the state . In WA state if you moor your boat or sign a morrage lease for any length time after purchase you have to pay taxes. Our yearly sticker is $450 for our $98,000.00 boat too high but we live here and is due last of June.

webejamin:
As someone who is in the market for a Gemini, I always read your posts with interest. But correct me if I'm wrong, aren't you paying close to the same taxes in WA? The sales tax is about the same and the property tax is only 0.5% less, a difference of about $40.00 a month from the maximum tax rate in CA (1%). Actually, the average rate in CA for property tax among all counties was .61%, making CA one of the 15 lowest states for property tax.
http://taxfoundation.org/taxdata/show/24078.html
Of course if you live on the coast, it is likely to be 1%. But I don't see that the taxes in CA are that much out of line with many other states.

[JayCall]

This issue seems to come up on a regular basis. The answer is really pretty clear. First, all states that have a sales tax have a corresponding use tax. the only difference between the two is where you made the purchase. So, the only time you have jurisdictional advantages is if you have a choice of keeping the boat in a state with no sales tax or a low sales tax or a high sales tax state like CA. Purchase instate, you pay sales tax, usually collected by the seller if it is a business. If you buy out-of-state, you pay use tax when you bring it into the state, less any sales or use tax pad to another jurisdiction. There is nothing in the Ca Code to support Zee's postion that taking the boat out of CA for a year will avoid use tax. If you bring the boat in with the intent it keep in CA, use tax is due. Unfortunately, other than moving the boat to a non-sales tax state, not much you can do to avoid paying the tax.

[zeehag]

equalization tax is sales tax on documented vessels.not use tax. that was gone years ago. there used to be both.

equalization tax is the sales tax not paid by anyone but buyer. is not paid by seller. sorry. is SALES tax. those residents buyng and registering in kali are not having to pay equalization tax. only those documenting the boat.(buyer)

the offshore purchase clause is for one year, thanks to governator arnie. it has gone from 90 days back and forth to 1 yr.

jaycall-i guess you register your boat--mine are documented. i paid sales tax to the equalization bureau.\
registered boats pay sales tax to dmv.

[JayCall]

Zee-First of all, I am in Wa, but issue is the same. I have represented boat owners on many sales/use tax issues in several different states. The seller, if a broker/business collects the sales tax, the buyer still pays it. If a private or out-of-state sale, the buyer is responsible for reporting and paying. If undocumented, it is collected when you register/title it through DMV. If documented, it is called "equalization" tax, but still considered use tax per Ca Code. You are responsible for filing and paying the tax. Ca even issues a handy pub, #79, to help you figure it out. I researched the CA Code for the 1 year thing and I did not find anything, would appreciate a link to it if you know it. Code still states if "brought into CA", use tax is due, no exemption listed based on time out of state since purchase. The only offset is for sales/use tax paid to another jurisdiction.