Sales taxes & Ownership

[Comodave]

What states are that aggressive it sounds mostly like east coast issue reading this thread.

Michigan does that. A lot of Loopers complain about Michigan being pretty aggressive about it, revenue. We bought a boat long ago in Washington and had to get it out before 90 days I think. California then questioned us about buying that boat and we proved that we bought it out of state and kept it out of California for more than 90 days, now 180 I think. But then since we had the documented boat home ported in Tucson, AZ California told Arizona that they should collect sales tax. But we proved to Arizona that we never had the boat in Arizona so they finally gave up. The way it worked out we never had to pay any sales tax on that boat.

 

[DDW]

Registering and paying fees in Canada is very likely to cost you more. I think BC is in the 15% range, also Ontario. Canada also triggers tax on visiting boats after 1 year. However in a very civilized twist, you can leave the country for a day, and the calendar resets. This is not true for example of WA state, 60 days cumulative over any 365 will trigger the tax even if in 5 separate transits.

 

[SteveK]

Registering and paying fees in Canada is very likely to cost you more. I think BC is in the 15% range, also Ontario. Canada also triggers tax on visiting boats after 1 year. However in a very civilized twist, you can leave the country for a day, and the calendar resets. This is not true for example of WA state, 60 days cumulative over any 365 will trigger the tax even if in 5 separate transits.

So how do we manage to get year round moorage in point roberts WA without triggering the tax? I think you are making up what you are saying without any facts.
There is quite a few on TF with US boats moored in Canada year round, would like to hear from them too.

 

[Patemey]

Not sure where you are in the sell/buy process, but if you are able to do a simultaneous closing of both on the same day, you can offset your sales tax burden on the new boat by the amount of the sale of the old boat (i.e. similar to the trade-in of an auto for a higher priced vehicle).

 

[PierreR]

Ohio is fairly aggressive on sales tax or use tax collection. You are required to register a boat in Ohio after 90 days but must pay the use tax to register the boat.
We purchased our boat in Louisiana and motored it back to Ohio. Louisiana has no sales tax on private sales. When we got back to Ohio, the state that I reside in we paid the 7% use tax and registered the boat. I don't have to watch over my shoulder.

 

[bowball]

So how do we manage to get year round moorage in point roberts WA without triggering the tax? I think you are making up what you are saying without any facts.
There is quite a few on TF with US boats moored in Canada year round, would like to hear from them too.

My understanding is the same as DDW’s on both Washington and BC.

 

[twistedtree]

So how do we manage to get year round moorage in point roberts WA without triggering the tax? I think you are making up what you are saying without any facts.
There is quite a few on TF with US boats moored in Canada year round, would like to hear from them too.

I'd be interested to hear how you handle year round mooring in Point Roberts. My understanding of the WA rules is like DDW's. The WA extension permits can get you up to 180 consecutive days, but then you need to be out until 1 years from your entrance date.

As for US boat in Canada, it's done just as you described. They can stay for up to a year, but then need to leave and re-enter to restart the clock. This is exactly why so many US boats stay in BC - to avoid the WA taxes.

 

[SteveK]

TT, I was in point Roberts marina for 3 years. I was asked to fill out a form, pay for a decal annually a decade ago. Can't remember if that was a cruising permit or a what. Back then the only thing I was made aware of was if I sold the boat while in the US I would have to pay a tax.
Since I am thinking about returning, I will have to read up to see what the regs are.
Currently there are several Canuck boats in my marina that had their boats in PR during covid and could not get them out. I will ask specifically, but none said they were asked to pay a tax.
Now made to think about it, I did cross the boarder more than once during the year so maybe I got away with something by accident.

 

[Delta Riverat]

While this is unlikely to apply to our OP. Should he buy a boat that is registered in California he would be forced to pay California sales tax, even if he promptly removed it from the state. Always know for sure the tax laws of California before making a major purchase in that state.

Oh yeah, the state of CA is quite vigilant wrt sales tax. Takes 'em a while but they do catch up. Seventy eight hundred in my case. Haven't billed me for property tax yet, but it's only 1%. Maybe not worth the while -

 

[Comodave]

Ohio is fairly aggressive on sales tax or use tax collection. You are required to register a boat in Ohio after 90 days but must pay the use tax to register the boat.
We purchased our boat in Louisiana and motored it back to Ohio. Louisiana has no sales tax on private sales. When we got back to Ohio, the state that I reside in we paid the 7% use tax and registered the boat. I don't have to watch over my shoulder.

We bought our last boat in Virginia. They had a 2% sales tax if I remember correctly. When I registered the documented boat in Michigan I had to pay the 4% difference from the Virginia 2% and the Michigan 6%. We have a MC number assigned to the boat for the state records keeping but don’t display the numbers just the year registration tag. Still have to pay the $230 registration fee every 3 years.

 

[DDW]

So how do we manage to get year round moorage in point roberts WA without triggering the tax? I think you are making up what you are saying without any facts.
There is quite a few on TF with US boats moored in Canada year round, would like to hear from them too.

Not making it up, I have a copy of the Washington statute right here on my desktop. Also the Canadian treasury regs. Enforcement on both sides of the border is lax, and Pt Roberts being effectively Occupied Canada there may be little inspection. I know people who have gotten away for years, I also know people who have gotten caught, and the price of getting caught is high.

There is a difference in time allowed, but also resetting the calendar: In WA, you are allowed 60 days in 365, up to 120 extension with paperwork but then must leave for a year. In Canada, a conveyance (boat or car) is treated as personal property like your suitcase, it can be temporarily imported with you, but must be exported with you as well. It can be left for up to 12 months from date of entry if you intend to return and use it within that period. Technically there is a form (E99 or E29B) that must be filled out if you leave the boat in Canada and return to the US without which it may be seized, but no marina or customs officer I could find had heard of it, knew what it was, or what it even looked like.

I did this for many years.

 

[Cold Duck]

Wow, everyone has an opinion on this issue. This is what I did. Bought in Florida. Boat was Documented in Fl. I changed Documented port to Hawaii (any port would do). When I move the boat to Hawaii, taxes will be required. As long as not yet in Hawaii, no taxes (sales or personal property are due). Then we moved within 30 days to Georgia (avoiding Fl sales tax) who didn't know or care that boat had changed hands in last 30 days. Kept boat in Georgia during hurricane season then returned to Florida during cruising season. Then left back and forth to the Caribbean. This worked for 6 years until we sold the 70ft vessel. No one anywhere questioned our documented port and assumed you pay taxes in that location, which we would as soon as we arrived in Hawaii. Now, since I had documentation papers sent to my Calif home, they immediately contacted me demanding taxes. After proving the vessel never went to California after a year they dropped their demand. I did have to show documentation like mooring fees, fuel bills etc that vessel was always on the east coast. This would not have happened had I sent the doc papers to my Hawaii address but I knew Calif would come after us, it was just more convenient to have papers sent to CAlif. There are ways to do it depending on your personal situation and use of the vessel.

 

[tiltrider1]

Wow, everyone has an opinion on this issue. This is what I did. Bought in Florida. Boat was Documented in Fl. I changed Documented port to Hawaii (any port would do). When I move the boat to Hawaii, taxes will be required. As long as not yet in Hawaii, no taxes (sales or personal property are due). Then we moved within 30 days to Georgia (avoiding Fl sales tax) who didn't know or care that boat had changed hands in last 30 days. Kept boat in Georgia during hurricane season then returned to Florida during cruising season. Then left back and forth to the Caribbean. This worked for 6 years until we sold the 70ft vessel. No one anywhere questioned our documented port and assumed you pay taxes in that location, which we would as soon as we arrived in Hawaii. Now, since I had documentation papers sent to my Calif home, they immediately contacted me demanding taxes. After proving the vessel never went to California after a year they dropped their demand. I did have to show documentation like mooring fees, fuel bills etc that vessel was always on the east coast. This would not have happened had I sent the doc papers to my Hawaii address but I knew Calif would come after us, it was just more convenient to have papers sent to CAlif. There are ways to do it depending on your personal situation and use of the vessel.

Yes, there are many ways to break the law and all is good as long as you don’t get caught.

 

[DDW]

Tax evasion is illegal, but tax avoidance is not.

California is aggressive at tax collection for residents, however it may be unique in that once you have proven that the boat was purchased for use outside of California and the exemption is granted (you have to apply for this with documentation, and they will check it), that exemption is permanent. That is, if you later bring the boat into California, it is still tax exempt. Same as if you moved to California and brought your boat with you. A nuance of this is if you move the boat later to say WA, they will attempt to tax you for the difference between CA tax and WA tax, and since you paid no CA tax, you owe all the WA tax.

 

[Cold Duck]

Yes, there are many ways to break the law and all is good as long as you don’t get caught.

This is NOT breaking the law, it is using the loopholes of various tax systems to ones advantage. Just as boaters sold their boats off shore of California then took to Mexico, it is a legal method of legally avoiding excess taxes. If you want to pay taxes you don't need to, by all means do so. Legally avoiding taxes takes significant work whether with boats or other assets. Selling real estate has the 1031 tax deferred trade to legally avoid taxes. I never said this works for all situations and all states. It works in the areas and states I stated. Other states on the east coast might not work, that's for the buyer to check out. Leaving the boat 365/yr at the same marina might change the whole thing. After all, he is buying a boat on the east coast, not in Washington.

 

[delirious duo]

Wow, everyone has an opinion on this issue. This is what I did. Bought in Florida. Boat was Documented in Fl. I changed Documented port to Hawaii (any port would do). When I move the boat to Hawaii, taxes will be required. As long as not yet in Hawaii, no taxes (sales or personal property are due). Then we moved within 30 days to Georgia (avoiding Fl sales tax) who didn't know or care that boat had changed hands in last 30 days. Kept boat in Georgia during hurricane season then returned to Florida during cruising season. Then left back and forth to the Caribbean. This worked for 6 years until we sold the 70ft vessel. No one anywhere questioned our documented port and assumed you pay taxes in that location, which we would as soon as we arrived in Hawaii. Now, since I had documentation papers sent to my Calif home, they immediately contacted me demanding taxes. After proving the vessel never went to California after a year they dropped their demand. I did have to show documentation like mooring fees, fuel bills etc that vessel was always on the east coast. This would not have happened had I sent the doc papers to my Hawaii address but I knew Calif would come after us, it was just more convenient to have papers sent to CAlif. There are ways to do it depending on your personal situation and use of the vessel.

I have a house in Hawaii something about this sounds fishy lol. So no proof of residency required. I would be skeptical about this idea. Of all the states why list Hawaii as a home port this state is pretty aggressive if they want to be.

 

[tiltrider1]

Let’s see, a California resident bought a boat in Florida, Registered it in Hawaii, moved it between FL and GA all to avoid paying sales tax. Just because some one got away with it does not make it legal. In fact, it is tax evasion not tax avoidance with the state of FL. True, you don’t owe CA or HI any sales tax.

 

[psneeld]

Actually, I believe Cold Duck did use a fairly well known loophole.

If you can escape sale tax where you bought the boat legally and never return the boat to your state of residence and never stay beyond the registration/taxation requirements in any other state...I believe it is legal.

He got out of Florida sales tax under this rule ....

https://floridarevenue.com/Forms_library/current/gt800006.pdf

"Within 90 days of removal, the nonresident purchaser must provide the Department with written documentation evidencing that the boat was documented, licensed, titled, or registered outside Florida or documentation that the nonresident purchaser has applied for documentation, licensing, titling, or registration of the boat"

 

[Cold Duck]

Let’s see, a California resident bought a boat in Florida, Registered it in Hawaii, moved it between FL and GA all to avoid paying sales tax. Just because some one got away with it does not make it legal. In fact, it is tax evasion not tax avoidance with the state of FL. True, you don’t owe CA or HI any sales tax.

It is sad that you need to talk with authority about something you don't have any knowledge about. It is NOT tax evasion in Florida! As has been stated just after your post, it is totally legal in Florida to not pay taxes on the sale or purchase of a vessel if it is moved out of the state within 90 days. This is not "Someone getting away with it", it's the LAW! Everything I stated is 100% legal and lawful. The OP was asking about tax issues in buying on the East Coast. The laws in Wash, Calif and Ore. are not the same as those on the East Coast. Now I have seen people in Calif register their boats in Wash or Ariz and keep them in Calif. That is illegal and is tax evasion, but what I posted is, again, 100% legal manipulation of the legal tax systems of the states involved.

 

[Cold Duck]

I have a house in Hawaii something about this sounds fishy lol. So no proof of residency required. I would be skeptical about this idea. Of all the states why list Hawaii as a home port this state is pretty aggressive if they want to be.

First, the objective of my purchase of the vessel in Florida was not to save on taxes. I had a 5 year plan to cruise the Caribbean. I then learned of the 90 movement from Fl and sales/personal property taxes were waived.

Second, I had planned to move the vessel out of Fl for the hurricane season anyway and Ga doesn't care where you are registered or how long you have had the vessel. It was not bought in Ga nor registered in Ga so they don't collect Sales tax.

Third, I had planned to document the vessel in Hawaii just to be different. I contacted them for clarification on their application of taxation on the vessel and it all came together. I suspected they would not want sales or use tax, but the fact that they wouldn't want personal property tax until vessel reached Hawaiian waters was a bonus. Hawaii might be aggressive, but my experience is it's more like a third world country, pretty laid back. I do have 2 other boats registered in Hawaii with "HI" numbers. The office is small, you can go in and talk with the officials with an "Aloha" spirit.

Not many people know this but lets say you buy a Ferrari for $150k in Calif (or any state for that matter). You do not register it, just have a signed "pink slip". If you immediately put it on a ship to Hawaii it costs $1000 to get to Hawaii. Since it is used, you have a signed "pink slip", they register it, no use or sales tax collected, just regular reg fees. Now you can immediately put it back on the ship for $1000, ship to California, register it as an out of state car with your Hawaii license plate and avoid Ca Use tax of $14,000 thus saving $12,000 in taxes. Not saying this is really something you would do, but it illustrates how you can legally avoid taxes. As I said before, sometimes you have to work at tax avoidance. But if it happens to coincide with what your plan is then you might as well take advantage of it.

 

[Judy at JWY]

"He got out of Florida sales tax under this rule ....
https://floridarevenue.com/Forms_lib...t/gt800006.pdf
'Within 90 days of removal, the nonresident purchaser must provide the Department with written documentation evidencing that the boat was documented, licensed, titled, or registered outside Florida or documentation that the nonresident purchaser has applied for documentation, licensing, titling, or registration of the boat'"

"...It is NOT tax evasion in Florida! As has been stated just after your post, it is totally legal in Florida to not pay taxes on the sale or purchase of a vessel if it is moved out of the state within 90 days."

I was afraid that incorrect information would be given. Details can be the difference between legal and illegal. The 90 day(and 180 day) exemptions are only issued through a Florida licensed yacht broker. As per my post #10:

Perhaps not relevant to the OP, but as a reminder: the State of Florida requires sales tax to be paid on any boat sold. On a FSBO, the buyer must remit the 6%+ sales tax at the time of purchase. IF buying a boat through a licensed yacht broker, the broker can file for sales tax exemptions which can allow the new owner to remain within the state for up to 6 mos. As to use tax, one can cruise in Florida waters without paying the use tax as long as one purchases the proper permits and plays by the rules.

 

[Cold Duck]

"He got out of Florida sales tax under this rule ....
https://floridarevenue.com/Forms_lib...t/gt800006.pdf
'Within 90 days of removal, the nonresident purchaser must provide the Department with written documentation evidencing that the boat was documented, licensed, titled, or registered outside Florida or documentation that the nonresident purchaser has applied for documentation, licensing, titling, or registration of the boat'"

"...It is NOT tax evasion in Florida! As has been stated just after your post, it is totally legal in Florida to not pay taxes on the sale or purchase of a vessel if it is moved out of the state within 90 days."

I was afraid that incorrect information would be given. Details can be the difference between legal and illegal. The 90 day(and 180 day) exemptions are only issued through a Florida licensed yacht broker. As per my post #10:

Perhaps not relevant to the OP, but as a reminder: the State of Florida requires sales tax to be paid on any boat sold. On a FSBO, the buyer must remit the 6%+ sales tax at the time of purchase. IF buying a boat through a licensed yacht broker, the broker can file for sales tax exemptions which can allow the new owner to remain within the state for up to 6 mos. As to use tax, one can cruise in Florida waters without paying the use tax as long as one purchases the proper permits and plays by the rules.

True, we did purchase thru a yacht broker and he did file the paperwork for us. That's what happens when you assume too much. Assumed the purchase of a cruising trawler would be thru a broker.

 

[Cold Duck]

Also I should say that my experience was 15 years ago. Tax laws change quickly so ya gotta do your homework!

 

[tiltrider1]

From your first post it sounded like you kept the boat in FL after a quick trip to GA. Now from your later posts it appears you left FL just before your temporary visitor’s time was up. If that’s correct then you did indeed legally avoided sales tax.

 

[twistedtree]

I agree with what Discover Bay is saying. Tax evasion is when you aren't paying taxes that are due, or that have "triggered". Tax avoidance is avoiding ever having taxes trigger, so none ever become due according to the applicable laws.

We operated our previous boat in a similar manner. It was Documented, with home port in Mass where we were residents. The boat had no other more compelling homeport, no permanent or long term moorage, and no identifiable place of primary use, so our place of residency was the most compelling choice. Our tender was also Mass registered. Mass accepts Documentation in lieu of state registration, so no additional registration required on the main boat. Mass taxes trigger when you bring the boat into Mass "for use in Mass". That boat never entered Mass, so mass taxes were never triggered.

The boat was purchased off shore from CA, and paperwork filed with CA stating the boat would be removed from CA within a certain time period. We removed the boat from CA as required, so no CA taxes were triggered.

We then cruised for a number of years in and out of WA, AK, BC, CA, MX, always following the visitor rules for each location, and never triggering taxes in any of those locations.

With our current boat, we followed a similar procedure for the first 2 years, but last year decided to pay the WA tax rather than have to keep moving the boat around to avoid triggering taxes, vs moving around as we pleased. It has simplified our cruising and ownership logistics, but was an expensive pill to swallow.

 

[denverd0n]

Georgia law requires you to register your boat in the state, and pay appropriate sales tax, if you keep your boat in Georgia for more than 60 days.


Of course, this is one of those laws that is very often not strictly enforced, and therefore easy to get around or overlook.

 

[Hippocampus]

Go to any marina in Rhode Island and expect you will see the majority of boat owners over~40’ who have seasonal slips are from MA or Conn. both those states pay very close attention to who is using any and all slips, mooring fields or even anchored out. They will catch you and tax you. But some exceptions are available. First is if you are a “ vessel in transit “ and can prove a justifiable reason for a brief stop. So if you are stopping to effect a repair, due to weather condition or personal health issue (includes sleep) that impacts on safety you may slide. Shared a finger pier with a gentleman who is a Boston and MA resident. He stopped in Boston to pick up family on the way to Maine. The boat (RI home port) stayed in a slip overnight. He got hit with sales tax. Was able to slide by saying he was sleep deprived and it was unsafe to not have sufficient crew for the rest of his cruise. Still needed a lawyer and a court appearance.
BTW for Massachusetts they tax on last purchase price not current valuation to my understanding. So have had friends sell their boats internally in their families or to a trust so they reflect actual current value.
Think MA and Conn are incredibly stupid. RI has a flourishing recreational boating industry. The taxes (real estate, income, sales etc.) that yard and service people paid to those states have just about left those states and migrated to RI. I’m pretty sure RI gets much more tax income from those sources than it loses from having no boat sales tax.
For millions of people going to RI from MA or Conn is an hour drive. People on 40’ plus boats use their boats for several days at a time. Between the tax benefits and the collection of skilled boat workers in RI they will and do tolerate that extra commute.
It’s a shame. Over the years there’s fewer and fewer mid to large boats harbored long term in MA. Fewer boat service people and all the boat manufacturers have left. Harbor is just small outboards and center consoles with a rare commercial fish boat. When I was still working there were multiple mid to large boat manufacturers in my county. Now there are none. Middle class is priced out and kids aren’t spending time with dads just messing around on boats except trailer boats. If the kids don’t boat the industry dies locally over time and that’s happening. Stupid tax policy. Less tax income. Loss of hundreds of years of tradition. Loss of part of the experience tourists saw when they come to visit. A active traditional New England small harbor was a thing of beauty. Now it t shirt and ice cream shops, bars, waterfront condos and restaurants.

 

[Cold Duck]

From your first post it sounded like you kept the boat in FL after a quick trip to GA. Now from your later posts it appears you left FL just before your temporary visitor’s time was up. If that’s correct then you did indeed legally avoided sales tax.

Like Twistedtree, our plan was never to leave the boat at a permanent moorage. The plan was to keep in the east coast for a few years and cruise in the Caribbean thus having no permanent home other than the documented home port. We legally returned to Fl and Bahamas and Ga for 5 years and then legally returned to Fl and put the boat up for sale with a broker. The buyer kept the boat in Fl so he had to pay all the Fl taxes upon purchase.

This is nothing new, Home porting a vessel at a port of convenience. Many cruise ships are home ported in places like Micronesia, Pohnpei, exotic ports of call where there is significant tax advantages. The only problem with this is when pirates take over your tanker home ported in a small Island for taxes, you have no "big guns" to come to your aid. Commercial vessels have been doing this for centuries. You think these big tankers even ever visit some small island in the south pacific? Sales tax (use tax) In Calif on a $500k boat is close to $50k. Doing a little maneuvering can save you a lot of money LEGALLY! Don't know about you, but $50k is not just chump change for me LOL!

 

[Cold Duck]

No one says the govt doesn't make some really stupid taxes. Can't remember how long ago but Feds decided they cud collect a "Fair Share" from the rich who buy yachts so they levied a tax on new yachts. Well, the rich didn't get that way by paying extra taxes so they started buying yachts overseas. The yacht building business in US took a nose dive, and builders had to layoff employees. So not only didn't the new tax generate new income but it put more people on the breadlines. I am a firm believer on the "Law of unforseen Consequences". This is one of the best examples!

 

[Cold Duck]

Oh, as far as possible Ga taxes, I was at a big marina in Brunswick, Ga. If they had contacted me or the state had requested taxes I would have obediently paid them. Usually the govts have the marinas give them a list of vessels docked there for tax purposes. My guess is it is very common for Fl boats to "flee" to Ga for the hurricane season and Ga takes that into account. Being in Ga for hurricane season also reduced the insurance substantially. A win/win for everyone.