Best state to register a new-to-us boat

[kapnkarl]

see attached.

[MJH]

Originally Posted by SJAxtell

Hello! We have just purchased a 53 foot Navigator that is located in Florida. We paid for the sales tax exemption sticker so that we could avoid paying sales tax in Florida. Since we will be living aboard, and selling our dirt home, we would like to register our new boat in the place that is the most cost-effective for us. We know that some states have low or no sales tax, and others don't have personal property taxes. The boat is currently registered with the Coast Guard. Any advice is appreciated! Thank you.

Steven and Janeen Axtell Toes in the Water

I am a Washington resident and purchased my new-to-me boat in Florida in 2007; I did not pay FL sales tax.

I then sailed the boat solo to TX where it was subsequently trucked to WA. I then looked into the possibility of registering the boat in OR where there is no sales tax. Turns out there is a mutual agreement between those two states concerning WA residents keeping boats in OR, particularly along the Columbia River, are taxed by WA. So, I dug into it a little deeper and learned that if I chose a port much further south along the OR coast I could avoid the WA tax. However, the long drive from my home was not worth the inconvenience so I registered in WA.

Months after the boat arrived in WA I received a letter from FL Bureau of Revenue requesting documentation that the boat had left FL which I provided. As I recall what I sent was NOT proof of WA registration (I waited as long as possible) but some service performed on the boat outside of FL. So, expect a letter in the future from FL Department of Revenue for documented proof that you moved the boat out of FL.

You should do your own research since you would be the one paying the penalty if wrong. Also, regulations change and the current one may be different.

[sailingharry]

Originally Posted by MicHughV

As noted above, most any folk buying a boat would like to avoid the associated sales tax, which can be a considerable amount in some cases, but I don't think I've ever heard or known of anyone being successful in this endeavor. Sooner or later some or other circumstance is likely to trip you up.
At the end of the day, as distasteful as it might be, you'd likely sleep easier if you just bit the bullet and pay it.

Not quite what you've said, but I have met many Canadians on boats documented in Canada, but the boats have NEVER been to Canada and NEVER WILL. Specifically because the day they enter, they owe sales tax (or import duties, or whatever). So they keep moving, never owe sales tax in any US state, and never owe taxes to Canada.
I suspect that in the US, if you are legitimately moving on a fairly constant basis (even if you break the 60/90 day rule on occasion), you will probably never get caught. My parents used to spend 4-5 months a year in Maryland (they lived in Florida and boat was documented with a Florida tax sticker) and never had to argue the case with Maryland.
As far as the "morality" of it, I'm conflicted. I hate tax fraud. But, if you are legitimately moving, what state SHOULD you pay to? Pick the most expensive, because that's the most noble thing to do? Pick the state you are a resident of, even if the boat has never been there? Or pick the cheapest (free?) state.
Documentation is required (unless you state register instead). The state tax sticker is an optional add-on. You don't owe it until you meet the requirement. So document it, and then live "on the edge" until you settle down, and then get the state sticker there.

[Trimaran Ken]

Originally Posted by S/V Illusion

Tax minimization is a good thing; tax avoidance isn’t….l

If you can legally pay no taxes, that is what you should do.

[SailingHarmonie]

Originally Posted by MicHughV

As noted above, most any folk buying a boat would like to avoid the associated sales tax, which can be a considerable amount in some cases, but I don't think I've ever heard or known of anyone being successful in this endeavor. Sooner or later some or other circumstance is likely to trip you up.
At the end of the day, as distasteful as it might be, you'd likely sleep easier if you just bit the bullet and pay it.

Actually you can, LEGALLY, avoid sales tax, as long as you follow the rules. The rules are complicated and vary from state to state, so it is certainly possible to get "tripped up". We do it, and are happy to tell any tax authority what we do, and they have always been fine with it. Some day, we will settle down from the nomadic life we live, and then we may owe use tax, at which point we will pay what's due.

Here is what is required: Buy a boat in a state (like Florida, for example) that allows you to immediately remove the boat from the state and not pay sales tax. Some states allow this, some do not. If you then remove the boat from each state you visit before the statutory requirement to register it, you avoid ever needing to register the boat with a state, and you do not owe sales tax (or to be very technical about it, "use tax").

Again, no matter what people post here otherwise, you are NOT required to register a boat in a state, unless a particular state requires you to do so under its rules. I have owned large boats for 25 years, and NEVER had one registered with a state, and have always been 100% in compliance with the rules.

Registration is ONLY ever dictated by where the boat is located. Not where you live, not your drivers license, not you mailing address. NONE of that matters.

If you live in New Jersey, and keep a boat in Florida (for example) Florida requires you to register the boat as a Florida boat if it spends more than 90 consecutive days in Florida waters. You can not legally keep the boat registered in NJ.

If you have a Federally Documented boat in California, you NEVER have to register the boat. California has other ways of hunting you down for taxes due (and trust me, CA will never miss the chance to collect a dime...)

We have had two tax authorities request proof from us that the boat was where we said it was, when we said it was. That was easily done with fuel or marina receipts. We supplied the proof that we were being honest, and they said, "Thank you." Well, Florida said thank you, California did not.

[S/V Illusion]

Originally Posted by Trimaran Ken

If you can legally pay no taxes, that is what you should do.

As we see here, tax avoidance rather than tax minimization seems to be the goal of some. The rest of us don’t play games and end up paying the “load” others avoid. This isn’t a “what can I get away with” world.

[torrmundi]

As said before, there may be not sales tax, but there can be use tax (SC, NC, GA, FL, AL, VA, MD, DC are some).

For states with sales taxes, there may also be add-on local taxes. AL has a whopping 6% typical local sales tax (depends where you buy in the state).

Use tax may be capped at a certain dollar limit, e.g. FL is $18,000, while MD is $15,800 and SC is $500. Some states cap use tax but not in-state sales tax (e.g. VA). Others don't cap use tax, which gets very expensive for higher-value boats.

Lastly, many states have annual personal property taxes.

The last time I checked, the zero-tax states were Delaware, Alaska, Oregon, New Hampshire and Rhode Island.

[sailingharry]

Originally Posted by torrmundi

Use tax may be capped at a certain dollar limit, e.g. FL is $18,000, while MD is $15,800 and SC is $500. Some states cap use tax but not in-state sales tax (e.g. VA). Others don't cap use tax, which gets very expensive for higher-value boats.

This bothers me. There is a regular sentiment in this country that "the rich don't pay their share." This fuels that argument. Here in MD, a solid middle-class buyer stretching for a $300K boat pays $15K in taxes. Daddy Warbucks buys a $30M mega yacht, and pays..... exactly the same. How is that remotely fair?


Now, the argument is that if they pay the full tax, they will park their boat and all their services elsewhere. But that's a sour story. Us poor folks can fund the state because we aren't rich enough to fly to where our boat is.

[SailingHarmonie]

Originally Posted by S/V Illusion

As we see here, tax avoidance rather than tax minimization seems to be the goal of some. The rest of us don’t play games and end up paying the “load” others avoid. This isn’t a “what can I get away with” world.

I am sorry.... I pay the taxes I owe, and no more. I don't "play games", I follow the rules. Watching the rules carefully and following them to my benefit is not "playing games" it is following the rules. I am not "getting away" with anything.

How many taxes do YOU knowingly pay that you are not required to???? If your answer is greater than ZERO you are foolish.

[smj]

Originally Posted by SailingHarmonie

Actually you can, LEGALLY, avoid sales tax, as long as you follow the rules. The rules are complicated and vary from state to state, so it is certainly possible to get "tripped up". We do it, and are happy to tell any tax authority what we do, and they have always been fine with it. Some day, we will settle down from the nomadic life we live, and then we may owe use tax, at which point we will pay what's due.

Here is what is required: Buy a boat in a state (like Florida, for example) that allows you to immediately remove the boat from the state and not pay sales tax. Some states allow this, some do not. If you then remove the boat from each state you visit before the statutory requirement to register it, you avoid ever needing to register the boat with a state, and you do not owe sales tax (or to be very technical about it, "use tax").

Again, no matter what people post here otherwise, you are NOT required to register a boat in a state, unless a particular state requires you to do so under its rules. I have owned large boats for 25 years, and NEVER had one registered with a state, and have always been 100% in compliance with the rules.

Registration is ONLY ever dictated by where the boat is located. Not where you live, not your drivers license, not you mailing address. NONE of that matters.

If you live in New Jersey, and keep a boat in Florida (for example) Florida requires you to register the boat as a Florida boat if it spends more than 90 consecutive days in Florida waters. You can not legally keep the boat registered in NJ.

If you have a Federally Documented boat in California, you NEVER have to register the boat. California has other ways of hunting you down for taxes due (and trust me, CA will never miss the chance to collect a dime...)

We have had two tax authorities request proof from us that the boat was where we said it was, when we said it was. That was easily done with fuel or marina receipts. We supplied the proof that we were being honest, and they said, "Thank you." Well, Florida said thank you, California did not.

The only way to buy a boat in Florida without paying sales tax is to buy through a broker and get a 90-180 day sticker. If you purchase from the boats owner you legally owe the sales tax. If your a Florida resident you legally owe the sales tax.

[DShant]

I like SailingHarmonie on this one. Basically they have it correct and legal, follow their advice. I have to admit that in the past I have purchased a rather large vessel and registered it in Delaware (no tax) and not documented it. The CG's only comment was "we need to close that loophole one of these days" when we were asked about the registration.



That boat I moved around and may have overstayed my time in various places but never had a problem. Florida is the only place I have ever been checked for registration and they are quick to check in marinas.


As for the tax comments I think George Sutherland (Supreme Court judge) has it right "

The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether to avoid them, by means which the law permits, cannot be doubted."

Basically they make the rules, you just have to figure out the best way to follow them.

[piloto]

Originally Posted by SJAxtell

Hello! We have just purchased a 53 foot Navigator that is located in Florida. We paid for the sales tax exemption sticker so that we could avoid paying sales tax in Florida. Since we will be living aboard, and selling our dirt home, we would like to register our new boat in the place that is the most cost-effective for us. We know that some states have low or no sales tax, and others don't have personal property taxes. The boat is currently registered with the Coast Guard. Any advice is appreciated! Thank you.

Steven and Janeen Axtell
Toes in the Water

USVI’s, no tax. Registration $100/yr, USCG documentation $26/yr

[letsgetsailing3]

You are actually going to keep the boat somewhere.


So you KNOW the real answer.

[sailingharry]

Originally Posted by letsgetsailing3

You are actually going to keep the boat somewhere.


So you KNOW the real answer.

Go back and re-read the thread. He will NOT be "actually going to keep the boat somewhere." Unless, by "somewhere" you mean "in the water."


My parent's have a friend that lives on a trawler. They do the Great Loop every year. They do have a bit of a "spot," one on the Great Lakes, one in Florida (I think). Not sure about their tax situation, or even where they register the boat. But they certainly don't spend 6 months of any year one state, and they probably don't even hit the 90 day rule in any one state.


LetsGo, what state would YOU suggest they register in? They probably picked one (and probably was based on where they lived when they bought it), but I would have real problems stating with authority which state they "should" register in!


As a further complication, let's assume that they spend 91 days in the northern location, and 91 days in the southern. In perfect compliance, they should get a tax sticker in both states. Unlike registration, that doesn't come with a title, so I guess you could put both stickers on at the same time.


Snow Birds have the same issue. If they live 6 months in Maine, and 6 months in Florida, they legally need to re-title their car twice every year, as you can't be in a state more than 60 (?) consecutive days without titling in that state. And unlike a boat tax sticker, titling can't be in two places, and each re-titling is a serious burden (vehicle inspection, get new tags, turn in tags, title fee, etc, etc).


My sister lives in a motor home. I think she is a resident of SD (picked for tax purposes). We aren't close, so I can't tell you on any month where she is. Same issue. Sure, she almost never goes to SD -- but she almost never goes to ANY state, so where SHOULD she be a resident? Her last house was in TN -- but she hasn't been there in years.

[merrydolphin]

Some people just have a hard time with the concept of FULL TIME cruising.
We cruised full time for over 20 yrs. Going to many countries and rarely in the US. The US not very cruise friendly anyway. We had no state that we called home. Had a mail service “St Brendands Isle “ in FL so paid taxes there remotely. Didn’t have any state registration. And why should we. The only thing we got out of FL was a mail service and a drivers license. And we paid for them, paying for the impact that we had on that state, which was almost none. We had no car, no house or property. We were world cruisers. We paid into the economy of the towns and counties that we sailed to.