Taxes

[LivingWhale]

Originally Posted by denverd0n

Glad to hear that you're keeping your real priorities in view. Some people seem to get so caught up in the tax things that they lose sight of what is really important--enjoying the boat. I was hoping that you weren't one of those.

One comment is that you have to be careful about your terms. You don't "document" a boat in any particular state. It is federal documentation. You "register" a boat with a state. Some require registration even if the boat is federally documented, some do not. And while the registration fees themselves are usually pretty reasonable, depending on the state, they may trigger other taxes and fees that are not so reasonable.

And then, of course, when it comes to sales/use tax, and property taxes, that's a whole different matter. Some states will charge you a sales tax for any purchase completed in their state, others a use tax when you bring it to their state, and still others have no such taxes (and, of course, among the states that do charge sales/use taxes, the rates vary dramatically).

Good luck.

It's tricky. I have not seen an issue, so far, with registering in Delaware (no sales tax and no property tax), except with SC, since I live here. It sure would be nice if someone compiled all the info and had it on one site, with the FACTS, laws, etc. It seems that each person gets an attorney, uses that attorney's opinions and then goes on their way. I have searched the web and I can't find anything (except a few opinions). My main question now is should I register the boat in Delaware and stay out of SC Waters (irritating, but not that big of a deal), or set-up an offshore corporation, then I can use the boat anywhere (with limited time in some states, but that's not an issue either, as long as I can have my NC home port), but this will also cost some money.

One person implied that I should just pay the SC tax and keep it here, but that's $10K+ a year. If I can avoid it, that will not happen. Plus, when my son graduates college, we'll probably relocate our primary residence to FL, as there are no state income taxes. Yes, enjoying the boat is important, but if I don't manage my money well, it will be short lived. Early retirement has it's drawbacks, but the sea is calling me!! Insert the new song "Sail" here! Just blame it on my ADD.

[Doodles]

Don't wish for or depend on some Internet website for your tax advice but instead invest in a good tax attorney or CPA. If you want professional results you need professional advice. Trying to save a few dollars by going on-line is penny-wise and pound-foolish.

[robert sailor]

Easy peasy! You hire a good tax lawyer and post the results for the rest of us, solves your problem!

[LivingWhale]

Originally Posted by Doodles

Don't wish for or depend on some Internet website for your tax advice but instead invest in a good tax attorney or CPA. If you want professional results you need professional advice. Trying to save a few dollars by going on-line is penny-wise and pound-foolish.

Agreed...however, I find it's important to do your homework and know as much as you can before hiring these folks. If you know what questions to ask and then you are in a much better position to get the best results...don't you think?

[Doodles]

Originally Posted by barrywhaling

Agreed...however, I find it's important to do your homework and know as much as you can before hiring these folks. If you know what questions to ask and then you are in a much better position to get the best results...don't you think?

Yes, but I think you already know the questions. They were your opening post. I'm a retired CPA, you are over thinking this. It is not that complicated.

[LivingWhale]

Originally Posted by Doodles

Yes, but I think you already know the questions. They were your opening post. I'm a retired CPA, you are over thinking this. It is not that complicated.

Yeah, you're probably right. Good to know you were a CPA. Thanks for the input...hope to see you out there one day soon!

[Doodles]

Originally Posted by barrywhaling

Yeah, you're probably right. Good to know you were a CPA. Thanks for the input...hope to see you out there one day soon!

No problem, I'm also a SC native and Clemson graduate.

[MBLittle]

I'm curious to know who takes advantage of the USVI tax free policy?

[s/vPainkiller]

Barry,
I live in SC and have kept boats here for 30 years. I'm pretty familiar with the situation but I am not a CPA. Documenting your boat does not remove your SC tax liability.

If you have a residence in SC, and document with USCG, SC will get your info from the CG. You will get a tax bill from SC for your property tax. You will have to be able to show that you keep the boat out of SC waters for most of the year (exact timing is county by county).

In the past people would incorporate in DE and that worked for a while, but the states have gotten smarter. Incorporation doesn't do much these days (speaking re: tax liability) but get you an address in DE. Also, SC dept of revenue folks walk the docks at marinas looking for boats that are not registered with SC.

If you are trying to avoid SC property tax, the best thing is to not keep it in SC the majority of the year. Bear in mind that most other states have their hand out as well.

Hope this helps.
Scott

[Cheechako]

I have found that most places , even if you are documented, you need a state registration sticker on your boat if you are in a state longer than their allowed "cruising permit" .Some are 90 days some are longer. You even need it for your motorized dingy.
They seem to overlook dry stored boats often.

[LivingWhale]

Originally Posted by MBLittle

I'm curious to know who takes advantage of the USVI tax free policy?

Me too...anyone out there that's registered outside of the US, but living in the US? Or may there be fear of posting for discovery?

[tdoster]

Originally Posted by Amnesia II

All you folks in the US seem to be heaped upon with taxes for just about everthing they can think of. I know when I bought my boat in Marina Del Rey, California, the broker advised I did an 'Offshore Transaction' to purchase....the boat was sailed 3 miles offshore to complete that as required! Saved me about $16000 I seem to remember.

Your Broker told you to do something illegal. You need to pay taxes in the State you bought it, or the State you plan to keep it.

States have become wise to this. You owe taxes, but it is a good question from the poster on the best way to pay taxes when you actually plan to cruise your boat.

[tdoster]

Originally Posted by Doodles

Don't wish for or depend on some Internet website for your tax advice but instead invest in a good tax attorney or CPA. If you want professional results you need professional advice. Trying to save a few dollars by going on-line is penny-wise and pound-foolish.

This is important, and get their advise in writing. I have seen one families life and cruising dreams ruined by taking bad advise from a broker, then being stuck with taxes and penalties and fines that were 10 times the amount of the original tax.

[JayCall]

Living Whale:

Not sure if you are still reading this thread, but, as a tax attorney and accountant I can offer bit of information, not legal advice of course, but some things to consider.

First fact of importance-all jurisdictions bases their tax scheme as it relates to personal property on the physical location of the property. This applies to a property tax if a jurisdiction has one and sales/use tax if a jurisdiction has one. In general, form of ownership and situs of ownership, i.e. a DE corp, are irrelevant.

Second Fact: SC imposes a property tax on personal property, for boats, the "assessed value" is 10.5% of the fair market value. Each county then taxes at its own millage rate. Assuming you are in Charleston County (a guess from your post) and your estimate of about $16K in tax is correct, then the imputed FMV of your boat is close to $600K.

Third Fact: I can find no sale/use tax exemption of limitation for boats. So, if you buy your boat out of state, and bring it in, you will owe use tax of $51K (Charleston's sales tax rate of 8.5% X $600K).

Fourth Fact: As you stated, you will also owe annual personal property tax on the boat. But, note that the FMV is a depreciated value, so the base value will decrease each year lowering the annual tax bill.

Now, look at Brunswick County, NC (note: I lived there for many years, quite a few years ago, still have a son there)

First Fact: If your boat is in NC for more than 90 days, you will be required to register it in NC, even if a documented vessel. Note also that NC uses NC Wildlife records, USCG records and reporting from marinas. So, assume this cannot be avoided.

Second Fact: Once registered, you will be assessed personal property tax on the boat, even if you are out of the marina on Jan 1 each year. The good news, in Calabash, on a $600K boat, the personal property tax should be around $3,200 annually.

Third Fact: When you bring the boat into NC and register it, you will have to pay Use Tax on it. Again, there is some good news-there is a cap on the amount of sales/use tax for a boat purchase-$1,500.00.

While this is not, and should not be construed to be legal or tax advice, it does appear that you would save a significant amount by legally registering and keeping your boat in NC. If you want a referral to a local Brunswick CPA, send me a PM and I can recommend one.

You may also want to do the same sort of analysis for GA as that is closer to you.

[cofc]

SC caps excise tax value at $6,000 which they tax at 5%. So the most you'll pay on any boat is $500

SCDNR - Boating Registration

I had a $14k CC that I bought from a dealer, only paid $300 sales tax.

As far as property tax goes, I just paid my bill (didn't sell it until the spring) and it worked out to roughly 2.5% of tax appraised value. My $14k (what I sold it for) Sea Pro was appraised at $10k (tax value).

We're looking at sailboats now and I guess we'll just register in SC.