Buying Boat in Maryland, Registering in Australia - Seeking Immediate Cruising Permit

[ianlgv]

Hi
We are about to finalise purchase on our boat in Maryland, we live in Oz but are retiring and will live aboard the boat immediately. We intend registering as an Australian boat immediately and hope to gain if possible 6 months in US waters. As we are going to complete some moderations and minor fit out. We do not want to have to run for Canada in a hurry so want 6 months in US. Of course we do not want to pay US tax as the boat will incurr Australian Tax. At this stage I do not even know what the tax is. Our Broker is from Florida but the boat is in Pasadena Maryland. Also any ideas on insurance ? Thanks muchly

[Chief Engineer]

How long do you plan on staying in The Chesapeake?

[ianlgv]

Hi
We plan on spending about 2 months, Fistly my son will live onboard and start fitting out and we will arrive a month later and hopefully explore the region while we get accustomed to the boat and life style.

[Boracay]

Those who live in the United States will be better placed than myself to comment, but it is possible that Australian registration is not required until the boat is about to depart for another country. The process takes time and documentation so it may be best to start it before leaving Australia. Information on registering a vessel as Australian may be found on the AMSA site.

There has been quite a bit of discussion in this Forum about US state taxes and when they become due. Some careful searching should find it.

Australian Customs will levy GST and other fees or charges. Import duty may be payable so it's best to make sure that all documentation is correct. AQIS will also have their own fees and charges. Again there has been considerable discussion on this topic in this Forum.

[ianlgv]

Thanks Boracay
I have the Australian Registration worked out OK, and the reason for not leaving in US registration is mainly to avoid paying tax in 2 countries. The importation to Australia will not happen for a couple of years, but we want to sail under Australian reg although we do not really have to. It does apparently assist with entering other counties and also offers limited assistance of the Australian Maritime services.

It is possibly a big ask to try and get 6 months in US straight up, but we really want to tidy up the boat fit it out for wind, solar and better navigation equipment before leaving.

[savoir]

No matter what you do be sure that you are registered somewhere. Try Tasmania

Welcome to the MAST website

It's fairly cheap and you pay no tax until you get there.

[skipmac]

Hello ianlgv,

First, I am assuming you are purchasing a used boat and not new.

There is no US national tax to deal with in the purchase but each state can (and most do) charge a sales or use tax which is more or less like a VAT on goods purchased in the state. Unfortunately the details can vary from state to state but most state taxes follow this profile.

1. The taxes will apply to purchases of used boats, not just new goods from a store or dealer so you can be liable to pay this tax.

2. Amount of the tax is usually +/- 6% of the sales value.

3. Most states rules allow exemptions to paying the tax if you fall in certain categories or meet certain guidelines.
- In many cases foreign citizens are completely exempt.
- In most states if you remove the boat from that state within a time limit you are exempt. Time is usually 30-90 days but does vary state to state.
- If you can prove that the boat is under repair most states will extend the time limit for removing the boat.

Your broker should be able to help you with these details. Unfortunately he's from Florida and the boat is in Maryland which may have very different polices. I would ask the broker to research the Maryland regulations on this.

I did a quick check on the Maryland Department of Natural Resources which is the agency that manages boat registration and taxes Maryland Department of Natural Resources - Boating

A quick read did not mention any of the exemptions I mentioned above. If your broker can't help you might try to contact the state directly.

Good luck,
Skip

[JimM]

Ianglv,

Re insurance: Try Susan Ratrie -- susan@imis.pro. I have found her very competent and responsive. I think others her have policies through her too.

And Congratulations!

JimM

[surfmachine]

The aussies hit you with gst on the cost to get the yacht shipped or sailed back to aussie as if it were done by professionals, even if you sail it back by youself, plus fumigation costs, plus, plus, plus gst on all of the import, inspection, quarrantine charges. It all adds up to a lot! Sometimes they want to put her in a tent and fumigate her, costs about 10K plus gst!
It is fairly simple to get her aussie registered, the import taxes are not payable until you bring her back to Australia permantly.
Good luck with the project and congratulations.

[svlamorocha]

You did not mention if the boat is new or used or where it is mad, and the spread of options varies depending on those inputs. That said, here you have a couple of broad ideas.

I suggest you explore the option of taking delivery of the boat in international waters (which would require the seller to take the boat out of US waters leave the US with the boat, which I understand is doable in most cases provided you do things right) then take it to Canada (folks in Florida do Bahamas) clear in, clear out and then bring it back to US as a cruiser.

I also suggest you explore buying the boat and registering it with a state (not USCG registration that is not directly possible for a foreign owner) following the procedures used by the many US citizens/residents who buy boats without paying state taxes. The viability and detail of those procedures depends on where the boat is, where the sale happens, where you "reside" and with luck you may be able to work the inputs (after all you can decide location if the seller is a willing seller) so that the output is what you want. I would hesitate to fix Maryland as place for the purchase unless that makes the outcome no worse than for a neighboring state (there are many very close!) The usual caveat is that those methods to avoid US state taxes on boats usually work for only a limited time, but you only need 6 months that should be OK. The beauty of this method is that you would not have to go through the hassle of being on a foreign-flagged boat in the US, which is significant after 9/11. There is a very diverse industry on state tax avoidance schemes, hence you should be prepared to look at things of all colors.

Assumming you are talking about a brand new US-made boat, I also suggest you find out how do the Beneteau folks get their South Carolina- made boats exported to the Caribbean. I am sure their customs broker has one or two ideas that can be of use to you.

Fair winds

Carlos

Originally Posted by ianlgv

Hi
We are about to finalise purchase on our boat in Maryland, we live in Oz but are retiring and will live aboard the boat immediately. We intend registering as an Australian boat immediately and hope to gain if possible 6 months in US waters. As we are going to complete some moderations and minor fit out. We do not want to have to run for Canada in a hurry so want 6 months in US. Of course we do not want to pay US tax as the boat will incurr Australian Tax. At this stage I do not even know what the tax is. Our Broker is from Florida but the boat is in Pasadena Maryland. Also any ideas on insurance ? Thanks muchly

[skipmac]

Taking the boat out of the state or even out of the country for a brief time will not prevent the states from coming after the sales tax on a boat if you register the boat in that state. The state of Rhode Island is the only state I know of on the US east coast that does not have a tax on boats.

However, even if you register the boat in Rhode Island if you purchase the boat in Maryland and the boat stays in Maryland they will come after the sales tax. Same applies for most other states.

[navigator54]

Hi Ian, did this exact thing a couple of years ago. You will be able to get a 12 month cruising permit free of charge for the US. Your passport visa will determine the length of time you can stay in US waters before you have to leave - your permit will still be good if you leave and return within the 12 months. Maryland advised me that while the boat was on the hard the time was not counted towards the time you can stay before sales tax is applicable so delay splash date until you are almost ready to leave the state. As you probably also know you are supposed to check in with homeland security each time you change anchorages (that is a real drag and you can be left on hold for 15 minutes or more). Different states apply this rule differently with Florida being the "most hot" on it. Cheers, Don

[djmarchand]

When you buy the boat in Maryland sign and send in to Maryland authorities an affidavit that says that you will remove the boat from Maryland waters within 90 days. Keep a copy with you as you may be stopped by Maryland authorities to check you registration status.

As long as you don't stay in any one state more than 90 days, you are generally not liable for state sales or use tax.

Maryland yacht brokers know these rules very well. If you have a Maryland sellers broker on their end of the transaction, discuss it with them. If not, you may want to call Atlantic Boat Documentation in Annapolis. They usually deal with USCG documentation, but I am sure they know the state rules as well.

David

[ianlgv]

Hi
We have now completed our purchase and are registered in Australia. We have our cruising permit and were exempt from tax as the boat was registered in Florida, but delivered in Maryland. Thanks to everyone for help and advice. We are now learning all about the Description of "BOAT" Bring Out Another Thousand". Nearly there though. We have the 5 x 215 Watt Solar panels ready to fit, the ^ new 300 amp Lifeline AGM Batteries installed and are now modifying the Bimini, Replacing all the running rigging, and moving all lines to the cockpit with one line reefing system.
We bought a new washing machine and love it. So far we have only had one day sailing, but should be able to get away between all of the fitting out chores. hopefully we will be done by end of June or early July.

[Vasco]

Nice to hear the end of the story! Lots of these threads are just left hanging and I often wonder whether the OP went through with the purchase etc. Fair winds, enjoy the Chesapeake.