Purchase Taxes

[SeaSloth]

I'm looking at buying a yacht out of state. Where do I pay taxes? The state where the sale took place? The state where it will be registered? Thanks.

[skipmac]

Well, kind of depends on the states and also what tax you mean.

If sales tax then generally it is paid in the state where you keep and register the boat. But if you buy a boat in most states and do not remove it from that state within a certain time limit, typically 30 days, then you will owe sales tax in that state. Then there are some states have no sales tax on a used boat.

If you do end up paying sales tax in one state but move the boat and register it in another state that also wants sales tax, most states will give you credit for the sales tax you paid in another state so you don't end up paying twice.

To get specific information you need to say where you will buy the boat and where you will keep the boat.

[delmarrey]

Originally Posted by skipmac

Well, kind of depends on the states and also what tax you mean.

If sales tax then generally it is paid in the state where you keep and register the boat. But if you buy a boat in most states and do not remove it from that state within a certain time limit, typically 30 days, then you will owe sales tax in that state. Then there are some states have no sales tax on a used boat.

If you do end up paying sales tax in one state but move the boat and register it in another state that also wants sales tax, most states will give you credit for the sales tax you paid in another state so you don't end up paying twice.

To get specific information you need to say where you will buy the boat and where you will keep the boat.

Just to add to this; there are time limits in most states. If you reg. in one state and move to another you may have to get a non-res permit usually lasting a few months. or reg. it w/o paying taxes if you've had it long enough. Each state is different so I would search the net for the state reg's.

[JayCall]

Both replies are pretty close. The main issue is the state the boat will reside in. If they have a sales tax, they also have a use tax, which covers out of state purchases and is, in every jurisdiction I am aware, the same rate as the sales tax. When you bring the boat into its home state, most states require registration and use tax payment within 30 days. You generally cannot register without paying the the use/sales tax. If the state in which you purchased the boat has a sales tax, it will generally be charged at the time of the sale and will be part of what you pay. Your home state will allow you a credit for that sales tax paid to the selling state. Save all documents and have with you when you register in your home state-you need proof of value (or they may use a "blue book" or similar value) and proof of payment of the selling state's sales tax.

[SeaSloth]

Thank you all. Very helpful.

[Hud3]

If the state in which you purchase the boat has an applicable sales tax, you'll need to fill out some paperwork stating that you moved the boat out of that state to your home state within the time frame allowed. Otherwise, they'll eventually come after you for their tax bite.

[jr_spyder]

You're going to get 50 variations of this unless you tell us where you are. I can tell you that in RI the rules are quite different than posted here, and very favorable to sailors. They get it that mariners are a critical part of their economy and want all the associated income in lieu of taxes. It works out well for everyone. Other tax bureaucrats should be so wise.

[Seahunter]

Sales tax is paid in your state of residence. This is a reciprocal agreement between states. There are not "50" different answers, only 50 different tax rates.

[skipmac]

Originally Posted by Seahunter

Sales tax is paid in your state of residence. This is a reciprocal agreement between states. There are not "50" different answers, only 50 different tax rates.

Not sure what you mean here but not only the tax rates but a number of issues differ state to state. States may have different time limits on how long a new owner has to remove the boat from that state before owing sales tax to that state, whether or not you receive credit for sales tax paid in another state, some (RI for one) have no sales or use tax on used boats registered in RI (regardless of where they are purchased, most states but perhaps not all require you to pay a state registration if your boat resides in that state for more than a certain time (usually 90 days) no matter when or where the boat was purchased.

In addition to sales and/or use tax and annual registration fees, some states also charge an annual property tax on the value of the boat.

[Seahunter]

Sales tax is sales tax, (if RI doesn't charge sales tax on boats then the tax rate is "0"); property tax is property tax (in CA, even LA County has an unsecured property tax fee); registration fees are fees, not taxes. Time limitations are still based on the state you call "home" along with the sales tax rates (and exceptions). Licensed brokers from the purchase state can only explain information pertaining to where they practice. EG, a recreational boat (some commercial boats can apply for tax free status) bought in Oregon and shipped to say Los Angeles, California will pay 8.75% sales tax, an assessed county property tax (1% of assessed value), and a "Use" tax if you're a liveaboard. One can defer paying the sales tax for up to 1 year but must make payment arrangements with BOE by the 13th month. As previously stated, all states employ different tax rules/rates.

[skipmac]

Originally Posted by Seahunter

Sales tax is sales tax, (if RI doesn't charge sales tax on boats then the tax rate is "0"); property tax is property tax (in CA, even LA County has an unsecured property tax fee); registration fees are fees, not taxes. Time limitations are still based on the state you call "home" along with the sales tax rates (and exceptions). Licensed brokers from the purchase state can only explain information pertaining to where they practice. EG, a recreational boat (some commercial boats can apply for tax free status) bought in Oregon and shipped to say Los Angeles, California will pay 8.75% sales tax, an assessed county property tax (1% of assessed value), and a "Use" tax if you're a liveaboard. One can defer paying the sales tax for up to 1 year but must make payment arrangements with BOE by the 13th month. As previously stated, all states employ different tax rules/rates.

Well I kind of thought that's what I was saying so don't really understand your point.

And 'Sales tax is sales tax"? OK, I'll have to think about it very carefully but I can probably agree with that statement.

Perhaps I misunderstand what you were saying in your first comment that "there are not 50 different answers only 50 different tax rates". I am simply trying to point out that there is more to the issue than just different tax rates in different states but also in how they are assessed and other tax, registration or similar costs that one might incur when purchasing a boat out of state. Seems your answer above addresses that exact issue.

[Seahunter]

Originally Posted by skipmac

I am simply trying to point out that there is more to the issue than just different tax rates in different states but also in how they are assessed and other tax, registration or similar costs that one might incur when purchasing a boat out of state.

Aye.

[landonshaw]

Here is one. I purchased a boat in Grenada and registered it with the US Coast Guard. ME, my home state, saw the registration and the home port. Because I have the boat out of the country and out of the state for over a year, I will not have to pay any sales tax even when I sail it back. That came in an offical letter from the ME Tax Dept.

[SKG56]

Say I buy a boat in Florida, register it with USCG with home port of Colorado, how long do I have to move the boat out of Florida, before Florida wants there sales tax?

[Capt Phil]

Denalione... there is a common work around for the sales tax issue and that is to take offshore delivery, keep the vessel outside the state, preferably outside the US for the requisite period of time, 90 days to 1 year, depending on the state law where you are legally trying to avoid the sales tax then re-enter the US/state where you are going to keep the boat armed with documentation memorializing the offshore sale and delivery, all receipts from the foreign ports and marinas, fuel purchases, hotels, etc.
It used to be so common a process in southern CA, there was actually a '90 day Yacht Club' in Ensenada, MX made up of folks who did exactly that.
I made a fair living for several years moving boats back and forth from LA and San Diego to Ensenada and points south for clients doing the offshore dance.
Some of the posters above have more recent and broader knowledge than I and have some good suggestions to follow... good luck, Capt Phil