LLC,s Best state for sailboat ownership.

[PiratesTreasure]

Originally Posted by skipmac

Would be interested in how this was done. The only way I know to right off any of the costs of something like a boat would be if it is used for some business purpose. Do you use charter your boat or use it for business entertainment with clients?

We did a LLC in Delaware, then the LLC bought the boat we are doing a complete refit, then putting her on the market, any profit/loss will then need to be claimed as income/loss, not knowing exact time (I believe 3 years).

At that time we will sell her to a new LLC.

[SailsWithFists]

Originally Posted by belizesailor

Used to live in FL and thats my knowledge too, never heard of the "export" status referenced above. Anyone have a citation for this?

When conducting a private sale - that is the seller does not operate a business in the state where the product is being sold - of USED products, the seller has ZERO duty to collect sales tax.

For items that require registration and/or titling - motor vehicles, boats, trailers, etc. - the buyer must follow state laws. However there can be exemptions. Since you are using Florida, their laws state:

• motor vehicle sales that are EXEMPT from sales and use tax: The [seller] delivers the vehicle to the purchaser outside of Florida

So far as I know, all states allow for the export of vehicles (and products) without collection of sales tax, but certain criteria must be met, and different products have different criteria.

That being said, you can purchase a boat in one state, then register it in a state that does not collect sales tax and export the boat from the state of purchase within the time specified by the state. You are not required to export the boat to the state of registry, just out of the state of purchase.

I have used this legal tactic successfully more than once. Once you hold a valid title and registration (state or otherwise), you are free to move about with your boat and avoid sales tax. Without a valid title and registration, some one will always try to charge you sales tax. However, there are other taxes (use, property, etc.) that may have to be paid based on where you register the boat and where you keep the boat that may be unavoidable.

You need to know the laws of the state in which you make your purchase, the state (or country) in which you register and title the boat, and the state (or country) in which you keep the boat for any significant length of time.

[belizesailor]

Originally Posted by SailsWithFists

When conducting a private sale - that is the seller does not operate a business in the state where the product is being sold - of USED products, the seller has ZERO duty to collect sales tax.

For items that require registration and/or titling - motor vehicles, boats, trailers, etc. - the buyer must follow state laws. However there can be exemptions. Since you are using Florida, their laws state:

• motor vehicle sales that are EXEMPT from sales and use tax: The [seller] delivers the vehicle to the purchaser outside of Florida

So far as I know, all states allow for the export of vehicles (and products) without collection of sales tax, but certain criteria must be met, and different products have different criteria.

That being said, you can purchase a boat in one state, then register it in a state that does not collect sales tax and export the boat from the state of purchase within the time specified by the state. You are not required to export the boat to the state of registry, just out of the state of purchase.

I have used this legal tactic successfully more than once. Once you hold a valid title and registration (state or otherwise), you are free to move about with your boat and avoid sales tax. Without a valid title and registration, some one will always try to charge you sales tax. However, there are other taxes (use, property, etc.) that may have to be paid based on where you register the boat and where you keep the boat that may be unavoidable.

You need to know the laws of the state in which you make your purchase, the state (or country) in which you register and title the boat, and the state (or country) in which you keep the boat for any significant length of time.

The Seller may have zero duty to collect, but that does not mean its not due. If a boat is not out of FL in 90 days, then the tax man will come knocking (maybe thats the same as the "export" you are refering to, but I dont recall FL statues using the term "export").

And...some States will want proof you paid Sales Tax somewhere else or they, may try to collect from you. Example: I moved my boat from FL to TX. Boat was purchased sales tax exempt under FL law because it was going directly into charter service in FL. TX attempted to collect Sales Tax from me, but official proof of sales tax exemption in FL confused them long enough that we were gone before they sorted it out.

[skipmac]

Originally Posted by SailsWithFists

When conducting a private sale - that is the seller does not operate a business in the state where the product is being sold - of USED products, the seller has ZERO duty to collect sales tax.

For items that require registration and/or titling - motor vehicles, boats, trailers, etc. - the buyer must follow state laws. However there can be exemptions. Since you are using Florida, their laws state:

• motor vehicle sales that are EXEMPT from sales and use tax: The [seller] delivers the vehicle to the purchaser outside of Florida

So far as I know, all states allow for the export of vehicles (and products) without collection of sales tax, but certain criteria must be met, and different products have different criteria.

That being said, you can purchase a boat in one state, then register it in a state that does not collect sales tax and export the boat from the state of purchase within the time specified by the state. You are not required to export the boat to the state of registry, just out of the state of purchase.

I have used this legal tactic successfully more than once. Once you hold a valid title and registration (state or otherwise), you are free to move about with your boat and avoid sales tax. Without a valid title and registration, some one will always try to charge you sales tax. However, there are other taxes (use, property, etc.) that may have to be paid based on where you register the boat and where you keep the boat that may be unavoidable.

You need to know the laws of the state in which you make your purchase, the state (or country) in which you register and title the boat, and the state (or country) in which you keep the boat for any significant length of time.

No question that a private seller has no responsibility to collect sales tax, that has not been the issue. The issue is the buyer, no matter where his/her legal residence or citizenship, is liable to FL (and most other states that charge sales tax on used boats) for the sales and use tax unless the boat is removed from the state within 90 days OR is documented to be in a boat repair facility and under repair, storage doesn't count.

[SailsWithFists]

Originally Posted by skipmac

No question that a private seller has no responsibility to collect sales tax, that has not been the issue. The issue is the buyer, no matter where his/her legal residence or citizenship, is liable to FL (and most other states that charge sales tax on used boats) for the sales and use tax unless the boat is removed from the state within 90 days OR is documented to be in a boat repair facility and under repair, storage doesn't count.

Yes, I specifically quoted the FL statute that says FL (other states are similar) does not collect sales tax on boats that are delivered (exported) out of state because they are considered exempt. I have done it more than once, in many states, including Florida.

[Woodland Hills]

Originally Posted by skipmac

No question that a private seller has no responsibility to collect sales tax, that has not been the issue. The issue is the buyer, no matter where his/her legal residence or citizenship, is liable to FL (and most other states that charge sales tax on used boats) for the sales and use tax unless the boat is removed from the state within 90 days OR is documented to be in a boat repair facility and under repair, storage doesn't count.

Florida allows up to 180 days with an extension......

[skipmac]

Originally Posted by SailsWithFists

Yes, I specifically quoted the FL statute that says FL (other states are similar) does not collect sales tax on boats that are delivered (exported) out of state because they are considered exempt. I have done it more than once, in many states, including Florida.

Yes, I actually did read your post. Did you read mine?

We are all in agreement that a boat can be tax exempt when purchased in Florida and I said as much. However exempt IF it complies with certain restrictions. One of those is that the boat must be removed from the state within 90 days. If the boat is removed from FL within 90 days AND it is not registered in Florida then it will be tax exempt.

If you don't remove it within 90 days it doesn't matter if you are a citizen of another country, register the boat overseas and intend to export the boat, FL statutes say you owe the tax. You might get away with not paying the tax if no one notices but you are legally obligated and if someone in authority notices they will demand payment and possibly a fine to go with it.

[skipmac]

Originally Posted by Woodland Hills

Florida allows up to 180 days with an extension......

Correct but to get the extension you have to prove the boat is being worked on by a boat repair business.

[svGenesis]

Originally Posted by PiratesTreasure

At that time we will sell her to a new LLC.

This has me intrigued.


When I purchased my last boat (In Florida) Through a Florida Broker He collected the Sales Tax. (At that time this was what i wanted.) When I sold it the guy who purchased it anchored in the ICW near WPB and never paid the sales tax. He contacted me 16 months later wanting me to get him a duplicate title so he could register and title it. (Yeah!!!)

Another instance during my ownership both of my 3/4" double braid (11,000lb tensile) mooring lines were cut and the Salvage guy who was permanently anchored about 50 yards from me "salvaged" my boat. (yeah!!!) I can see a practicle use where several layers of roadblock liability can come in to play in unusual instances.

[hellosailor]

I seem to remember one post, maybe five years back, where someone had an argument with an east coast broker about that. Apparently in whatever state that was, at that time, BROKERS were required to collect the sales tax at the time of the sale, while private sellers were not. And then the buyer was expected to get it credited to the tax due wherever it was eventually registered, or something like that.

I'm not saying it was true or that I remember it correctly--just saying, private sales are often treated differently. Most states collect the tax at the time of titling and registration, and at that time they check the bill of sale for the sale date as well.

[Woodland Hills]

Originally Posted by skipmac

Correct but to get the extension you have to prove the boat is being worked on by a boat repair business.

Incorrect, the 90 day extension is different from the shipyard exemption, which can be as long as needed to rework the vessel in question. IIRC the first 90 days is only $20, but the next 90 days are $275.

[Woodland Hills]

Originally Posted by SailsWithFists

When conducting a private sale - that is the seller does not operate a business in the state where the product is being sold - of USED products, the seller has ZERO duty to collect sales tax.

For items that require registration and/or titling - motor vehicles, boats, trailers, etc. - the buyer must follow state laws. However there can be exemptions. Since you are using Florida, their laws state:

• motor vehicle sales that are EXEMPT from sales and use tax: The [seller] delivers the vehicle to the purchaser outside of Florida

So far as I know, all states allow for the export of vehicles (and products) without collection of sales tax, but certain criteria must be met, and different products have different criteria.

That being said, you can purchase a boat in one state, then register it in a state that does not collect sales tax and export the boat from the state of purchase within the time specified by the state. You are not required to export the boat to the state of registry, just out of the state of purchase.

I have used this legal tactic successfully more than once. Once you hold a valid title and registration (state or otherwise), you are free to move about with your boat and avoid sales tax. Without a valid title and registration, some one will always try to charge you sales tax. However, there are other taxes (use, property, etc.) that may have to be paid based on where you register the boat and where you keep the boat that may be unavoidable.

You need to know the laws of the state in which you make your purchase, the state (or country) in which you register and title the boat, and the state (or country) in which you keep the boat for any significant length of time.

If you avoid sales tax, but are still liable for use tax in the same amount, why bother? Seems like a lot of hassle for little return and you end up always looking over your shoulder for the taxman in whatever state you spend more than a few weeks......

[belizesailor]

Originally Posted by Woodland Hills

If you avoid sales tax, but are still liable for use tax in the same amount, why bother? Seems like a lot of hassle for little return and you end up always looking over your shoulder for the taxman in whatever state you spend more than a few weeks......

Shuffling State to State in the USA could indeed be a hassle. A friend of mine used to periodically move his boat back and forth across the TX-LA border to avoid taxes.

However, if you are going cruising out of country...then no problem.

[Nariel]

I have a very novice question here. How is the tax/registration checked and monitored?

I am envisioning a little tax man in a cheap suit with briefcase, bald spot, and bad glasses riding around in a dinghy and stopping to knock on the stern.

But seriously, can someone tell me how this is monitored and enforced in most states? I am curious if you are coast guard documented and cruising between states and staying under the appropriate visiting guidelines (ex: 60-90 days or less) what documentation is typically requested and by whom. Thanks for helping a newb understand!

[skipmac]

Originally Posted by Nariel

I have a very novice question here. How is the tax/registration checked and monitored?

I am envisioning a little tax man in a cheap suit with briefcase, bald spot, and bad glasses riding around in a dinghy and stopping to knock on the stern.

But seriously, can someone tell me how this is monitored and enforced in most states? I am curious if you are coast guard documented and cruising between states and staying under the appropriate visiting guidelines (ex: 60-90 days or less) what documentation is typically requested and by whom. Thanks for helping a newb understand!

Most states you are required to show proof that the sales tax was paid when you apply for the boat registration. The various water police look very closely at the registration numbers and stickers on boats when they're patrolling and if you don't have an up to date you will get a ticket and have to show proof the boat is registered which will then require proof of sales tax paid.

USCG documented boats again in most states also have to pay state registration if they stay in a state more than 90 days. You cannot put the registration numbers on a documented boat but states can require you to post the sticker in a prominent location. This one is a little harder for states to enforce but it does happen. In the past FL actually patrolled marinas writing down boat information, came back in 90 days and any boats still there were required to get a FL registration.