Various Boat Taxes

[Hud3]

If you live outside the US and have no residence in the States, you don't have to be a resident of a state. You'll still be obligated to file a federal tax return if you have income from investments you hold in the US and for any offshore income.

However, not having a US mailing address can create complications. US credit card companies will want you to have a US mailing address. So will your US investment firm and US banks. They're probably not licensed to have offshore clients.

The simplest thing to do is to use a mail forwarding service, like St Brendan's Isle in Green Cove Springs, Florida. Google them using the custom CF Google search and you'll find a lot of info. They can also help you file for domicile in the State of Florida. You don't have to own property in Florida to be a legal resident there. Florida has no income tax, no death tax, and doesn't tax investments. You can also get a drivers license there once you establish domicile. We've been doing this for the past six years with no problems whatsoever.

[Cheechako]

I opted for Florida registration as it was cheaper sales tax than my home state WA. They wanted a Fl mailing address didnt ask or seem to care if actually lived there. As mentioned I used one of the lower tax counties. Previously I actually tried to register the boat in WA and they refused if it wasnt there! However, had I not told them it wasnt there there would have been no issues! As far as I can tell, there are no "back registration" issues. (ie: if you dont pay registration for a few years, you dont have to pay all the past ones to get a current one) is this true? If you're sailing the Carribean, you simply say I moved away.... now I'm back. If you leave within 90 days of buying the boat, you dont have to pay sales tax at all if you come back and resell the boat.

[jeremiason]

Originally Posted by Cheechako

As far as I can tell, there are no "back registration" issues. (ie: if you dont pay registration for a few years, you dont have to pay all the past ones to get a current one) is this true? If you're sailing the Carribean, you simply say I moved away.... now I'm back. If you leave within 90 days of buying the boat, you dont have to pay sales tax at all if you come back and resell the boat.

It sounds like you cruised for sometime without a current registration and got away with it... I don't know when you did it, but the four countries we have visited so far, would not allow you in with an expired registration or documentation. They also would not clear you out if your documentation or registration expired while you were visiting. No to mention EVERY marina required a copy of you current registration document, acting on behalf of the local Port Captain.

As previously mentioned St BRENDAN's ISLEis a great place to establish residency in FLORIDA. Once you have a couple of bank statements and boat documentation addressed to your SBI mailbox, you can obtain a Florid Drivers License and Voter Registration Card... Or in other words, become a Florida Resident, which has NO STATE INCOME TAXES and only taxes boats that are in the State.

SBI will help you do this and act as your agent in regards to Documentation with the USCG. Every year they sign the rennual card and forward me my documentation certificate.

Good Luck!

[Cheechako]

OH.... my cruisiing boats were definitely Documented... no doubt you need something like that !

[denverd0n]

Originally Posted by Cheechako

If you leave within 90 days of buying the boat, you dont have to pay sales tax at all if you come back and resell the boat.

Nit-picking a bit, but just to be completely clear and precise, you will have to be gone from Florida, and using the boat elsewhere, for a minimum of 6 months in order to avoid paying sales tax.

If you return within less than 6 months of buying the boat, Florida will want their taxes. Also, if they believe that you just parked it somewhere else for 6 months so that you could avoid the taxes, they will come after you. In the latter case you will have to be able to prove that you were actually using the vessel with things like receipts for gas, marinas, pump-out, whatever (a SPOT track, or blog with photos of your journeys might work).

[hellosailor]

"If you leave within 90 days of buying the boat, you dont have to pay sales tax at all if you come back and resell the boat. "
I suspect that is not quite right. Florida will still ask for the tax, plus penalties and interest, UNLESS the boat was registered someplace else, not simply taken out of state. If you have no other registration for it, and you're using a "residence" address like SBI...they're going to say "gimme!"
Buy in FL, duck out and register in...? And prove it wasn't just a road trip.

[skipmac]

Originally Posted by hellosailor

"If you leave within 90 days of buying the boat, you dont have to pay sales tax at all if you come back and resell the boat. "
I suspect that is not quite right. Florida will still ask for the tax, plus penalties and interest, UNLESS the boat was registered someplace else, not simply taken out of state. If you have no other registration for it, and you're using a "residence" address like SBI...they're going to say "gimme!"
Buy in FL, duck out and register in...? And prove it wasn't just a road trip.

Will also depend if you are a FL resident or not. If you are a legal resident of another state but buy a boat in FL you have 90 days to remove it from the state or pay the sales tax. If you then keep the boat and use it outside of FL for at least 6 months OR you pay an equal sales tax in another state, you can bring the boat back to FL to stay or resell and be charged the sales tax.

[skipmac]

Originally Posted by In Training

Thank you, I totally understand the risk and your point.

I just have no intention of retiring to a cold environment (as Indiana is during the winter) and expect to be out of the country for 3-10 years. Thus once I retire, I will be choosing a different state to be my residence and I might as well choose one that is the least tax expensive since I won't be here anyway.

FL is a destination for retirees for a reason; no state income tax, no state personal property tax, reasonable real estate tax rates. If you stay away from the big cities or upscale retirement communities the cost of living, including boat work and slips, is reasonable.

The only glitch might be the sales tax on purchasing the boat. On a $100,000 boat this could add $6000-$7000 to your cost.

If you buy the boat before you move your legal residence to FL AND keep and use (FL's rule to determine compliance) the boat out of FL AND buy/keep/register the boat in a state that doesn't charge their own sales tax (there aren't many, RI is one) THEN you can legally avoid the sales tax.

[hellosailor]

So you move to RI
Then go buy a boat in FL
Bring the boat home to RI for 7 months
Change your mind and retire down to FL
And you've legally avoided the sales tax?

And all it will cost you is the RI Income Tax, 3.75% or 4.75% or 5.99%.

I guess whether that's a savings or not, depends on your income, the price of the boat, and all the fun you can have along the way.

Better to move to NH and take the boat up there. No income OR sales tax, although they charge 5% income tax on dividends and interest. I guess that keeps the pesky retirees out.

If word of this gets around, NH's gonna need some more sea coast.

[skipmac]

Originally Posted by hellosailor

So you move to RI
Then go buy a boat in FL
Bring the boat home to RI for 7 months
Change your mind and retire down to FL
And you've legally avoided the sales tax?

Yes, unless you do this for the purpose of avoiding the FL sales tax, then you do owe it. Catch 22 strikes again.

Originally Posted by hellosailor

And all it will cost you is the RI Income Tax, 3.75% or 4.75% or 5.99%.

Maybe not. In my case I worked in CT and had dual residence in RI and FL, bought the boat in NY but registered and kept the boat in RI. Even my accountant had trouble figuring out who I owed and who I didn't.

Originally Posted by hellosailor

I guess whether that's a savings or not, depends on your income, the price of the boat, and all the fun you can have along the way.

I think I saved money but only my accountant knows for sure and she's not talking.

But I did have fun. Lived aboard and commuted from Narragansett Bay, then well after the legal limits decided to move the boat to FL for refitting. Had been on many sections of the ICW from the Gulf Coast to NY but it was my first trip all the way down and it was a great trip. Look forward to doing it again.

[SV Demeter]

Originally Posted by Hud3

If you live outside the US and have no residence in the States, you don't have to be a resident of a state. You'll still be obligated to file a federal tax return if you have income from investments you hold in the US and for any offshore income.

However, not having a US mailing address can create complications. US credit card companies will want you to have a US mailing address. So will your US investment firm and US banks. They're probably not licensed to have offshore clients.

The simplest thing to do is to use a mail forwarding service, like St Brendan's Isle in Green Cove Springs, Florida. Google them using the custom CF Google search and you'll find a lot of info. They can also help you file for domicile in the State of Florida. You don't have to own property in Florida to be a legal resident there. Florida has no income tax, no death tax, and doesn't tax investments. You can also get a drivers license there once you establish domicile. We've been doing this for the past six years with no problems whatsoever.

This is our plan but I still have some questions. Need to talk to the St Brendans folks some more cause they were very helpful. Currently we live in MD. We bought our bout 2 years ago in RI and I cant recal but am pretty sure we paid RI sales tax. I dont recall ever paying MD any sales tax and think I would recall that. Boat is CG Documented with our Annapolis MD addess and I recall paying some fees initially to get the documentation but for the past two years I have just been renewing the CG Documentation and paying MD a $10 documented vessle fee to get my sticker. No MD registration, no MD title.

We intend to use St. Brendans for all of our mail and would like to make our official mailing address FL. We intend to cruise outside of the US for winter and who knows where after but do not plan to actually live aboard in FL for any length of time other than maybe a visit.

Im not worried about income taxes but Im wondering if FL will want me to pay sales tax on my boat when I change my CG documentation to show a FL address?

Then theres the dinghy to deal with...

[hellosailor]

Since Florida is the only place woith the authority to enforce their vessel registration rules, and IIRC conveniently they only require registration on vessels that are IN the state waters, if you have no intention of ever setting foot there you're free.

OTOH, when you declare your intention is never to actually reside there...technically that means it won't be your residence and that stands a very tiny chance of coming back to bite you. Each state is a little different policy but residency and domicile can be based on actually living there, or simply on the intent to "return" and live there one day. The intent to never be there...<G>...might be reconsidered.

[In Training]

The problem is getting residence in Rhode Island. From their web sites it appears you have to live there first for 2 months in order to get residence. Figure the rent is $900 a month so you are out $1,800 just to get residence and save Florida sales tax.

If you purchase a used boat for $130,000 at 6% the sales tax of $7,800. You would still save $6,000 but that 2 months before you find the boat could extend to 3 or 4 months, no telling how long you would have to live there before your purchase -- could take a year to find the right boat. And -- it is cold up there if you get stuck there for a whole winter.

I will be able to live with my mother for free after our house sells while we look for a boat. I think that will far outweigh the savings from the sales tax. This just seems like too little savings for soo much hassle.

[hellosailor]

"From their web sites it appears you have to live there first for 2 months in order to get residence."

Would two bills from a rooming house do the job? Or do they insist on the whole nine yards, utility bills, postmarked mail, the top of your head showing up on Google Earth? <WEG>

Where do they post the requirements?

[skipmac]

Originally Posted by SV Demeter

This is our plan but I still have some questions. Need to talk to the St Brendans folks some more cause they were very helpful. Currently we live in MD. We bought our bout 2 years ago in RI and I cant recal but am pretty sure we paid RI sales tax. I dont recall ever paying MD any sales tax and think I would recall that. Boat is CG Documented with our Annapolis MD addess and I recall paying some fees initially to get the documentation but for the past two years I have just been renewing the CG Documentation and paying MD a $10 documented vessle fee to get my sticker. No MD registration, no MD title.

No sales tax in RI. Bought my boat almost three years ago. The boat and I lived in RI for about 7 months and registered my boat and dinghy there. You pay a reasonable registration fee but positive there was no tax.

If you move the boat to another state you might owe tax depending on how long you owned the boat and the laws of that state.

Originally Posted by SV Demeter

Im not worried about income taxes but Im wondering if FL will want me to pay sales tax on my boat when I change my CG documentation to show a FL address?

Then theres the dinghy to deal with...

Unless they have very recently changed, you are exempt from paying sales or use tax in FL if you meet the following:

1. Boat was purchased out of state or if purchased in FL was removed within deadline (30 days I think??).

AND

2. You are a legal or dual resident of another state and keep the boat out of FL for at least 6 months.

AND

3. The boat was purchased for the intention of using it outside of FL, not just to avoid the FL tax.

OR

4. You paid equivalent or higher sales tax in another state.

If you want confirmation I think I still have the links to the state of FL web sites that address the issue.

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