What Does this Mean: 'Not for Sale to US Residents While in US Waters'

[jacket_fan]

I have seen this statement on adds on Yachtworld.

NOT FOR SALE TO US RESIDENTS WHILE IN US WATERS

What limits sale to US residents. One particular add was a boat for sale in Florida.

Thanks

[daysailc]

She is a foreign flagged vessel and needs to be sold out of U.S. territory...or just plain expensive .

[Vasco]

Foreign flagged vessels for sale in the US have to pay duty etc. if offered for sale in the US. This has to be paid the minute the boat is offered for sale. No sale is required to trigger the provision re duty, just an offer of sale is sufficient. By putting in that disclaimer the vendor is simply getting around paying custom duties prior to a sale.

[jacket_fan]

Is this common?

Do you go over to the Bahamas and conduct the sale if you are a US citizen?

[Vasco]

It is very common. You can do an offshore handover or if you want to keep the boat in the US buy it and pay the duty.

[jacket_fan]

Vasco, I was typing as you were posting.

Much clearer now. Especially with this comment:

"By putting in that disclaimer the vendor is simply getting around paying custom duties prior to a sale."

Duties would have to be paid at sale, correct?

[jacket_fan]

Darn it, I am slow responding. You are fast on the response. Sorry if it appears I am restating after your last respone.

Thanks for clearing this up for me.

[jkleins]

It seemed like some people would do this offshore in California back in the 90's to avoid the California sales tax if they came from a state that had lower taxes so it wasn't just out of country folks who found it helpful to sail 3 miles off the coast to take possession.

Jim

[teneicm]

So assuming you do an offshore transfer to keep the liability out of the SELLERS hands, what is the effective customs duty that the buyer has to pay if he returns to the US with the boat? This is a federal duty that doesn't vary from state to state, right? And this is also on top of any sales tax that may be required, correct?

[Dave852]

Originally Posted by teneicm

So assuming you do an offshore transfer to keep the liability out of the SELLERS hands, what is the effective customs duty that the buyer has to pay if he returns to the US with the boat? This is a federal duty that doesn't vary from state to state, right? And this is also on top of any sales tax that may be required, correct?

Some boats may be exempt from the federal duty such as South African boats due to free trade agreements. After being granted that status she may lose it by being sold offshore. So in that case you would close less than 12 miles to keep the duty status but more 3 miles to avoid the sales tax. If the boat is flagged offshore you would sail under a cruising permit for 1 year. After that you must leave the country for a minimum of two weeks before being granted a new permit. If you choose to fly the US flag then sales tax is due to whatever state you keep the boat in.

[teneicm]

Originally Posted by Dave852

If you choose to fly the US flag then sales tax is due to whatever state you keep the boat in.

Thanks for the info. Do you mean sales tax or federal import duty? Or both?

What if the boat is from a non-exempt country? Do you know what the import duty rate is?

[Pblais]

Sales tax is state and duty is federal. They have no relationship to each other. It's all but impossible to answer the complete question in a theoretical context. The details of the transaction matter as much as the potential issues. For instance sales tax is collected at the time of transaction but use tax is the same money paid after the sale. As noted above duty is a federal tax due upon offering the boat for sale. Should you create an offshore transaction it is still import duty.

Where the boat transaction occurs, where the boat was made, where you take the boat and where it eventually is kept all enter into the equation and the order and timing of all as well.

[teneicm]

Thanks Paul. I understand that there are countless potential scenarios that could change the exact outcome; I guess I was just looking for a general estimate of what the import duty is these days (I think I have a pretty good handle of the sales tax issue). Much the same way you can't know EXACTLY what someone's income tax is going to be, you can make a rough generalization that the Federal government is going to tax roughly 25-33% of your earnings each year.

Just trying to get a rough estimate of how much I would need to budget for this additional expense on top of the sales tax if we were to purchase a boat with this sort of restriction.......

Any links you might have to the regulations/ statutes would be very useful! Thanks again!

[Dave852]

Originally Posted by teneicm

Thanks Paul. I understand that there are countless potential scenarios that could change the exact outcome; I guess I was just looking for a general estimate of what the import duty is these days (I think I have a pretty good handle of the sales tax issue). Much the same way you can't know EXACTLY what someone's income tax is going to be, you can make a rough generalization that the Federal government is going to tax roughly 25-33% of your earnings each year.

Just trying to get a rough estimate of how much I would need to budget for this additional expense on top of the sales tax if we were to purchase a boat with this sort of restriction.......

Any links you might have to the regulations/ statutes would be very useful! Thanks again!

I believe it's 1.5%, much lower than most country's. Have a look at http://findhts.com/tariff/search

[Canibul]

Do people literally sail two boats out over the horizon and then swap them? I mean, who monitors exactly where the papers were located when they were signed?