Looking to Change State Residency and Cruise for Several Years

[jimL]

Looking to Change State Residency and to Cruise

Hi there,

My wife and I are closing in on selling the dirt home and moving aboard our about to be purchased GB, and to cruise. We live in the NE and know we'll end up somewhere in FL a few years from now. Until then we plan on cruising the East Coast, and Caribbean.

As we approach the purchase of our next boat, we'd like to minimize excessive fees that are not value added. The boat is USCG documented.

We're exploring starting to use this service and was wondering if anyone one else uses this service:

https://www.sbimailservice.com/how-it-works/

The ultimate goal is to escape a NE state and all of the taxes and do what we need to do so the new USCG documented boat and dinghy is registered in a more tax friendly state. We'll also change our drivers licenses etc....

Thanks much,

Jim

 

[jimL]

Hi there,

My wife and I are closing in on selling the dirt home and moving aboard our about to be purchased GB, and to cruise. We live in the NE and know we'll end up somewhere in FL a few years from now. Until then we plan on cruising the East Coast, and Caribbean.

As we approach the purchase of our next boat, we'd like to minimize excessive fees that are not value added. The boat is USCG documented.

We're exploring starting to use this service and was wondering if anyone one else uses this service:

https://www.sbimailservice.com/how-it-works/

The ultimate goal is to escape a NE state and all of the taxes and do what we need to do so the new USCG documented boat and dinghy is registered in a more tax friendly state. We'll also change our drivers licenses etc....

Thanks much,

Jim

 

[Alaskan Sea-Duction]

I have friends that are full time cruisers. They live and work from their sailboat. All mail is forwarded to a service. They are documented. They are careful not to stay in one place too long. They do not own a dirt dwelling. They do not pay registration or state taxes. They have cruised from SEAK down the coast and are currently in Mexico.

 

[OldDan1943]

Currently I am a resident of GA.
To change my residency to FL, I must get a FL driver's license, giving up my GA driver's license and the plates on the car. Of course I will have to inform my health care insurance of the address change.
AND if I want to vote, I must change voting address.
Each will require a 'dirt' address. They dont like post office boxes. Change the home port on the boat transom but then, I would have to pay annual property tax on the boat and the documentation etc.
I use the marina office address as necessary.

 

[JohnS]

State of residency

SBI, St Brendans' Isle, provides both a residency address acceptable to Florida, at a local marina, and a mailing address.
You may / will need to have official mail, bills, etc. sent to you there.
There is a Florida State form, Declaration of Residency, that affirms that you intend thereby to become a Florida Resident. You would complete this as part of applying for a drivers' license and voter registration.
You would then change all of your other accounts, SoSec, taxes, etc to your new Florida address.
Check with a tax attorney in your state about how to purchase your boat to minimize taxes.
Florida will allow a Fed Registered boat 120 days to leave Florida, and not be subject to Florida sales tax, IF the boat is bought through a dealer / yacht sales agent.
With the possible exception of Maryland, most states charge sales tax, N Carolina charges a property tax if the boat is in N C more than ?? 6 months. Florida does not charge a tax to own the boat, minor cost of state registration excepted.
If you are cruising the East Coast, you may save hassles by getting a State registration.
Most states will credit you for taxes paid in other states, checkbif your state will allow you to buy and leave, or buy the boat as a Florida resident, for registration here.
Florida may not charge sales tax on a boat bought elsewhere and owned for more than 6 months.
Good luck with your purchase.
JohnS

 

[Shrew]

If you never stay in any state longer than they require for registration, then you don't need to register it anywhere. Keep in mind, registering in a state which doesn't levy taxes on boats, such as New Hampshire, doesn't mean you don't have to also register it in another state if you remain there too long. It is possible that you might need to register in multiple states.

Typically, most states don't charge taxes if you've registered and paid taxes in another state. However, each state varies. One might say that since you haven't paid taxes on your NH registration, you must in their state. Other's levy a Sales and Use tax, and collect no matter what.

 

[Frosty]

SBI is a great mail service, IMO. There are two ways you can use it though:

1) Maintain your domicile in another state, and just use them as a mailing service.
2) Change your domicile to Florida, and use them as your address/mailing service.

Sounds like you want to do #2. Something to think about is that you need to change enough things for it to be legit. I don't know that there is any cut-and-dried line, but the more the better. Basically, you don't want it to look like (or be) a sham and you really live somewhere else.

So, things like health insurance, banking, car titles and registrations, voter registration. These would be best in Florida, and not great to keep in your previous state (as if you really hadn't moved to Florida but were just trying to take advantage the concept).

Probably no-one moves every last tie, and I don't necessarily think that's required, but the more the better, from the perspective of making it genuine.

A couple of possible downsides:

1) If you have a commercial driver's license you will have to give it up unless you have a street address you can use (say a friend or relative). You can't keep it with the SBI address.

2) Some banking or similar may balk at that address (others may not, especially if they are accounts you already have vs. opening new).

3) Boat or car insurance may be more due to hurricanes, etc. (but maybe not more than CT, which at least in my mind is an expensive place to live?).

There are cheaper states than Florida in terms of boat sales tax, but it's also not anywhere near the most expensive. Florida is used to people living there part time, and SBI is established in the community, which helps. I can't overstate how great a good mailing service is. Just one example: A couple of years ago the Clay County elections people decided that "outsiders" (i.e. those domiciled say at SBI) shouldn't be able to vote in Clay County (funny thing is, they were obviously one "color" of party and assumed most SBIers would be the opposite but I actually think they likely had it backwards).

This wouldn't have been such a big deal (local elections) but the way the USA works is that unless you are registered to vote locally, you can't vote in national elections either. That would put out a lot of military, traveling nurses, and of course others such as boaters. Suddenly you'd be disenfranchised. Luckily SBI was organized and went to bat for their customers and that was resolved.

Some other considerations (which you may already have taken into account): Do you use health insurance? If so, then wherever you settle, consider whether the available plans make it a hassle to get care outside your home community. Insurance (already mentioned). Then things like personal property taxes (those can quickly make a "low tax" state look darned expensive when you have things like boats and cars and RV's). In other words, just look at the big picture for you individually, because a "no tax" state might be best or might not end up being great, just depending.

One "don't," IMO, would be to have a Florida domicile, a boat documented in another state (especially a no-sales-tax one), and then boat in Florida. They look for that.

For travelers, Florida, Texas, and South Dakota are the usual "go to's" and make it fairly painless. But they may not be the best choice just depending on your individual situation (for example, SD is pretty sparse on health insurance plans if you are pre-medicare).

SBI is top notch though! Even if you "only" use them as a mailing service but domicile elsewhere.

 

[jimL]

Thanks for the quick replies everyone.

Here's bit more clarity:

We will sell the dirt home and not have one for at least several years - starting in a bout 18 months.

We will not have any cars/SUVs etc...

We will eventually settle in the south and probably FL but at this time we are not sure - that's why we're going to cruise.

We're in the purchasing process of a buying a documented trawler (which from I understand may not need to be registered in a state) - However, the dinghy will need to be registered, therefore we'll have to pay taxes on the dinghy, but more importantly I want to cut ties with my current state and not pay taxes in the current state.

We did live in FL a few years ago and still have a license plate for a previous SUV.

I have a pistol permit from FL, however the address would need to be changed.

Does any of this change the conversation? We do plan on contacting SBI to get more clarification after we digest your advice.

Thanks - Jim

 

[Frosty]

There are probably many ways to do it - and I'm not familiar with the "fancier" ones (starting LLC's or registering in the Caymans or whatever).

However given that you may very well settle in Florida, moving domicile to there makes sense from that perspective. They don't have a massive boat sales tax, although it's not nothing either.

SBI is great

Sounds like you may not be worrying about health insurance or vehicles.

On the boat though: I think it would be possible to buy a documented boat in, say, Rhode Island, pay no sales tax, and then just keep on the move and not pay it anywhere else. Many states do have a registration requirement if you are there past a certain number of days, which could get sticky, but only if you settle in.

HOWEVER, I think if you are a Florida resident (or domiciled there), then you will have to pay the sales tax and register the boat in Florida basically from the moment you enter the state. Someone can correct me if I'm wrong on this (please), but I think they are pretty picky about that. And even if you are "on the move," it's hard to avoid spending a bit more time in Florida over the winter if you are on the east coast. So for trying to stay on the move and avoid paying tax, I think FL domicile might be a tricky choice.

So is it worth it to get around that somehow? LLC for the boat? Domicile somewhere else for a few years, then change again? That probably depends on personal factors. Between the convenience of FL (SBI etc.), and if I thought I would settle there eventually anyway -- I'd probably just domicile there now and pay the tax. But then maybe that's why I'm not considered overly clever or wealthy There could very likely be a better way (I'm all ears to hear what people have to say).

 

[23435ps]

Keep in mind that state residence and domicile are two different things. Residency is the state in which you live ("reside") while domicile is the state you intend to make your permanent home. In most cases, for most people these are the same but not necessarily. Some states look at how long you are in the state (6 months is a common period) and consider one a resident for tax purpose regardless of their stated domicile. Yet, one's domicile also can look for their taxes regardless of where one "resides." It is very possible to owe state income and/property taxes to two states- it happens all the time. States can be aggressive in seeking tax $$ so if one leaves a state with no intent to remain a resident or domiciliary it is always best to sever legal, business and other ties and establish them somewhere else. And boat registration is an entirely different set of factors- that has been discussed at length here and in other posts. Residency and domicile can be complicated and a mistake can be costly. Sometimes getting good legal advice may be a good idea.

 

[Hippocampus]

We bought and documented our boat in Rhode Island. No sales tax. View the decision as to state residency is an independent decision. St. Brendons is excellent for mail but even with them in place you may want to consider other things when considering residency/domicile. Our concern was management of financial affairs and non boat related taxes. We wanted the ability to put everything on autopilot so our only concern was cruising and the boat. In order to achieve truly throwing up the anchor and be totally independent while cruising we maintained our state residency. Didn’t want to disturb the financial arrangements, personnel and support systems previously established. Eventually you will return to land. After 7 years of cruising remain pleased with that decision.

 

[Frosty]

We bought and documented our boat in Rhode Island. No sales tax. View the decision as to state residency is an independent decision.

I agree but it could be different if one is domiciled in Florida. My understanding (which could be wrong) is that if you cruise into Florida, as a Florida-domiciled person, they expect you to have the boat registered in FL (even if it documented).

I'm in the typing box, so can't read the OP, but I think they were going to be cruising in Florida.

On the sales tax, I think if you have owned the boat (5 years?) and paid sales tax in your (former) home state then FL doesn't take any new.

I do agree that there is more to think about than just "no state income tax!"

OP: I just happened to run across this this evening because I was looking to read about a refrigerator mod they made. Anyway, they were long time CT residents - like you - and moved their domicile to Florida (they now cruise full time). They made the move in 2017. Here is a link. Note that I would say they are "domiciled," but many say resident as it's a more familiar term.

https://esc-pod.com/becoming-a-florida-resident/

 

[Datenight]

Just a point of interest that most in CT buying boats probably know. The sales tax rate on boats is 2.99% vs. the general rate of 6.35%. It was lowered to compete with neighboring Rhode Island whose rate on boats is 0%.

Rob

 

[DonW28]

I spoke to Florida regarding taxes and unless they have changed it in the last few months then you do not have pay sales taxes on a boat you owned when you register it in Florida so long as you have owned it for more than 6 months and 1 day before you enter Florida. And paying or not paying sales taxes to get an offset only matters if you in the less than 6 month window. Sounds like you have no issue with Florida for sales taxes.



My bigger concern if I were a resident of the NE is some of the stories you see in the news about state tax departments aggressively going after folks for what they see as attempts to avoid state taxes. Not sure if CT is in that camp but I'd make darn sure there was no doubt you are gone and not coming back. I'd say once your house is sold and vehicles are gone you are well on your way. Only you know if you have a retirement income that is large enough for the state to even bother you. Good luck in your adventure. Don

 

[friz]

Hi there,

My wife and I are closing in on selling the dirt home and moving aboard our about to be purchased GB, and to cruise. We live in the NE and know we'll end up somewhere in FL a few years from now. Until then we plan on cruising the East Coast, and Caribbean.

As we approach the purchase of our next boat, we'd like to minimize excessive fees that are not value added. The boat is USCG documented.

We're exploring starting to use this service and was wondering if anyone one else uses this service:

https://www.sbimailservice.com/how-it-works/

The ultimate goal is to escape a NE state and all of the taxes and do what we need to do so the new USCG documented boat and dinghy is registered in a more tax friendly state. We'll also change our drivers licenses etc....

Thanks much,

Jim

Lots written about SBI. Suggest you do a "search". Well known service used by many. I don't personally as I have a "dirt home" here in Florida. Florida residency is a big plus.

 

[Larry M]

We do and no complaints. They’ve been forwarding our mail for 5 years. I use my sister’s house for a dirt address but they can help you there.

 

[Shrew]

States with No Income Tax:
Alaska
Tennessee
Wyoming
Florida
New Hampshire
South Dakota
Texas
Washington
Nevada

States That Don't Tax Boats:
Alaska
Delaware
Montana
New Hampshire
Oregon
Rhode Island

NOTE: You do not need to be a resident of the state to register the vessel in that state. I've lived in New Hampshire and Florida and my boats have been registered in CT and RI. Vessels are registered where the vessel lives, not where you live.


States with No Sales Tax:
Alaska
Delaware
Montana
New Hampshire
Oregon

 

[Shrew]

My bigger concern if I were a resident of the NE is some of the stories you see in the news about state tax departments aggressively going after folks for what they see as attempts to avoid state taxes. Not sure if CT is in that camp but I'd make darn sure there was no doubt you are gone and not coming back. I'd say once your house is sold and vehicles are gone you are well on your way. Only you know if you have a retirement income that is large enough for the state to even bother you.

CT is aggressive. I kept a boat in CT but registered it in NH. CT came after me for the taxes, plus a fine, late fees and interest on the unpaid taxes. By the time I was done, I paid double what the taxes would have been had I simply paid the taxes to begin with. You only pay taxes to CT if the boat is bought and registered in CT. The next boat I bought was from CT, however I moved the boat to a RI marina and registered it in RI.

 

[Frosty]

Shrew: But don't I remember that although they have "no income tax," New Hampshire (and I believe Tennessee) do tax investment income? That could make a difference for some people. I also think Alaska is fairly picky about people who try to claim they live there but really don't (Washington State is as well). By that I mean they want you to actually be in the state X months per year.

I mentioned this above but personal property tax can be a sneaky one. In the past I lived and worked in a state with reasonable income tax, boat buying tax, and registrations, etc. But oh the personal property tax! Brutal! And unlike sales tax when you buy a boat, it's every year! If you have a high ratio of "toys" (boats, cars, RV's) to other property it's killer.

Another thing to consider is if you have family in a particular state. It may not be the cheapest, but there are other benefits such as a "real" street address you can use, maybe they handle certain mail for you, etc. All depends on the specifics of each situation though.

There are some good reasons that Florida, Texas, and South Dakota are the "big three" for travelers choosing a domicile. And for boaters Florida is probably the most obvious of those since many boaters will spend a chunk of time there, and there is a lot of coastline. But an individual situation can always change that, and could lead one toward a completely different place.

 

[Shrew]

Shrew: But don't I remember that although they have "no income tax," New Hampshire (and I believe Tennessee) do tax investment income?

NH taxes Interest and dividends at 5%.

 

[Wayfarer]

I've been happy with SBI for about a year and a half now. I've been using that as my address for most purposes, but haven't finished formally moving my residence to FL yet. Hopefully I'll have that taken care of in the next few weeks.

 

[jleonard]

CT is aggressive. I kept a boat in CT but registered it in NH. CT came after me for the taxes, plus a fine, late fees and interest on the unpaid taxes. By the time I was done, I paid double what the taxes would have been had I simply paid the taxes to begin with. You only pay taxes to CT if the boat is bought and registered in CT. The next boat I bought was from CT, however I moved the boat to a RI marina and registered it in RI.

The state of CT got several boats in our marina a few years ago. They were all registered in RI to avoid taxes. And yes they got fined big time like you did.

 

[amapola]

Florida requires you to register your boat and dinghy regardless of USCG documentation. Sales tax is 6% plus we pay an additional 1% local sales tax. Last year we paid $7,300 real estate tax for our 2,400 sq ft home on a 120'x80' waterfront canal lot.

 

[Exsailor2018]

SBI mail service

We used SBI for 6 years and it was great. You get a voting address, FL DL, and it is all pretty much painless. We were US Documented and registered the dink in FL. Give them a buzz they are most helpful. You then become one of the many with a Green Cove Springs address.

 

[Helmsman]

Frosty, Tennessee taxed dividends and interest income until 12/31/2020. Effective 1/1/21 there is no income tax for individuals in Tennessee. They started reducing the percentage of interest and dividend tax by 1% a year from a high of 6% a few years ago. There is no property tax on a boat. Just registration fees annualy of about $30. The sales tax, however, is 7.5% on a boat, one of the highest in the country. Howver, if you purchase the boat from a lineal relative, you are exempt from sales tax.

Shrew: But don't I remember that although they have "no income tax," New Hampshire (and I believe Tennessee) do tax investment income? That could make a difference for some people. I also think Alaska is fairly picky about people who try to claim they live there but really don't (Washington State is as well). By that I mean they want you to actually be in the state X months per year.

I mentioned this above but personal property tax can be a sneaky one. In the past I lived and worked in a state with reasonable income tax, boat buying tax, and registrations, etc. But oh the personal property tax! Brutal! And unlike sales tax when you buy a boat, it's every year! If you have a high ratio of "toys" (boats, cars, RV's) to other property it's killer.

Another thing to consider is if you have family in a particular state. It may not be the cheapest, but there are other benefits such as a "real" street address you can use, maybe they handle certain mail for you, etc. All depends on the specifics of each situation though.

There are some good reasons that Florida, Texas, and South Dakota are the "big three" for travelers choosing a domicile. And for boaters Florida is probably the most obvious of those since many boaters will spend a chunk of time there, and there is a lot of coastline. But an individual situation can always change that, and could lead one toward a completely different place.

 

[Frosty]

Frosty, Tennessee taxed dividends and interest income until 12/31/2020.

Good info Helmsman, thanks for posting that and updating us on TN.

Since I'm back, another point to mention on boat sales tax, is that there are a number of states that have X% tax, but then also have a maximum $ figure (I think FL may be one of those, but I don't tend to fall into those categories).

Still, boat sales tax is just one part of a puzzle that can have quite a few pieces.

 

[Datenight]

Shrew,

There is no property tax on boats or aircraft in CT. We do not pay property tax on the boat but we do pay a registration fee, in our case for a sticker since we are documented.

The cost for a 45' boat $337.50 for fiberglass, $168.75 wood boat, $84.38 wood boat over 25 years old.

Rob

 

[Shrew]

Shrew,

There is no property tax on boats or aircraft in CT. We do not pay property tax on the boat but we do pay a registration fee, in our case for a sticker since we are documented.

The cost for a 45' boat $337.50 for fiberglass, $168.75 wood boat, $84.38 wood boat over 25 years old.

Rob

Rob,

I never used the term 'Property Tax'. Technically CT levies a Sales Tax, which is what I was referring too.

Vessels and trailers used for transporting a vessel purchased on or after July 1, 2018, will be charged a sales tax rate of 2.99 percent. Vessels and trailers used for transporting a vessel with a purchase date before July 1, 2018, will be charged the current sales tax rate of 6.35 percent.

The boat I was referring too was purchased in 2008, CT caught up to me in 2010. My current boat was purchased in 2017. Both were subject to a 6.35% sales tax collected at the time of registration in the state of CT.

 

[Datenight]

Rob,

I never used the term 'Property Tax'. Technically CT levies a Sales Tax, which is what I was referring too.

Shrew,

Sorry about that. I was referring to post #17. I thought CT should be added to states that don't tax boats.

Rob

 

[ksanders]

WOW! I am so glad that I am a resident of Alaska!

I pay...

No sales tax
No income tax

I do pay about $600 a year in property tax to the bourough (county) where i have a permanent slip though. But my slip is only about $3K a year.

So... the plan is to not be in any7 state other than Alaska long enough for them to claim I/we live there.