Purchasing a boat in Washington State

[Defever 45 Steel]

Hi TF Members,

We're including Washington in the search for our next trawler and could use your experience.

Are there any excessive hoops to jump through once a contract is signed in the state? Any lessons learned about Washing state taxes and fees if one does not plan on home berthing in Washington?

We wanted to be thorough by reaching out to the Forum and eliminate surprises.

Thank you.

DPG

 

[slowgoesit]

If the boat is documented, and stays in Washington more than 30 days after the sale finalizes, you are required to either pay WA state Sales Tax, or purchase a "Cruising Permit". A one year cruising permit for us was in the neighborhood of about $600 IIRC. That is good for 1 year. At the end of the year, you either need to stay out of the state for 24 months (can't even legally come in to clear customs) or pay sales tax. We originally thought we'd be out of the state earlier than 12 months, but Covid threw us a monkey wrench, and we ended up paying sales tax . . .
This was all in 2020/2021, so best to get with the State Tax Assessor to get the straight scoop with latest changes.

 

[Comodave]

We bought a boat in Washington back in 2002. You had to be out of the state in X number of days but you could apply for an extension. Don’t know the current rules.

 

[tiltrider1]

Slowgoesit is correct. However, there is also an extension if the purchased boat goes into the yard for work. This extension has too many details for me to remember. You would want to research what type of work qualifies before applying for the extension.

 

[Larry M]

If it’s a private sale, use a marine title company. It should cost between $500-$1,000. If the sale is going through a broker, a marine title company will be (should) be involved. As previously stated, there are time limits on how long the boat can stay in WA before taxes are do. The seller has 15 days to report that they have sold the boat. We’ve bought 4 boats in Washington and can vouch for that the tax collectors take their jobs seriously. Good luck on your new ride!

 

[twistedtree]

Assuming you are not a Washington resident, and that you don't plan to keep the boat in WA....There are two paths you can take that exempt you from sales/use tax.


The first path is to fill out a form saying you are a non-resident and they you will be removing the boat from the state. You then have 45 days after purchase to move the boat out of state. If you return, you do so under the non-resident visitor rules which are another quagmire.


At purchase time you can purchase a cruising license that allows you to stay in WA for a full year. This is what Slowgoesit described. After the year is up you must stay completely out of the state for 2 years. After the 2 years are up, you can return under non-resident visitor rules.


My understanding with both of these is in teh context of buying through a licensed WA dealer. The rules may be different if buying privately, or may not even apply.


Be very cautious asking officials for advice or guidance on the rules. In my experience you will get different and sometimes contradicting answers when asking different people, and sometimes answers that are directly counter to the applicable WA laws. So my advice it to play it VERY conservatively. You are looking at 8% to over 10%, so the stakes can be pretty high.


After probably 6 years across two different boats of following the rules and juggling the boat around to remain compliant, I finally gave in and paid the use tax and registered the boat in WA. I was just tired of doing the dance and the shuffle.

 

[twistedtree]

One other thing.... if you are a Washington resident, then as soon as you buy a boat in WA, or bring one into the state, even for a second, it immediately triggers the tax. You have something like 30 days to pay, but you become immediately liable for it. And for the sake of levying taxes, WA considers the whole of the Strait of Juan de Fuca, and the whole of the Columbia River where it boarders OR to be WA territory. This includes the part of the Columbia that's in Oregon, and the parts of SJF that are international waters. Go figure. Where's Ralph Nader when you need him....

 

[Defever 45 Steel]

Thank you all for the good information in answer to my request concerning Washington State and taxes on watercraft. Much appreciated!

DPG

p.s.
I know I have spoiled boating our trawler in Alaska since 2012.

 

[sledge]

There's one other option some people pursue if you're ultimately not planning on keeping the boat in Washington(?)
We bought a boat in WA but did not intend to keep it there. We did opt for the 1-year cruising permit and by the way it was well worth it; the cruising grounds there like the San Juans are exceptional.
We were both still working at the time and ran into a problem that we couldn't easily move the boat out of the state at the end of the permitted year, so it was recommended we temporarily move it across the sound to Canada. If the rules haven't changed, Canada allows you to visit on your boat for 364 days of a year without a tax implication. We spent some time in Sidney and Victoria and were able to explore the Gulf islands for a couple months before we finally managed to move the boat out of the region.

 

[Darlin]

Take delivery offshore or Canada.

 

[tiltrider1]

Take delivery offshore or Canada.

Canada tax is worse than Washington State. Offshore leaves you in a legal limbo that might or might not work out for you.

 

[SteveK]

Canada tax is worse than Washington State. Offshore leaves you in a legal limbo that might or might not work out for you.

How so? I suspect it is whether you are a citizen in the country of sale. I know a previous boat I moored in Point Roberts needed to be removed before the sale or I would have had to pay WA some money even though it was Canadian registered regardless if sold to American or Canadian.

 

[twistedtree]

Take delivery offshore or Canada.

If you take delivery in Canada then you would be subject to Canadian taxes which I believe are even more burdensome.

And off shore is complicated because WA apparently won’t allow the owner to be onboard for the run out. Now that might only be for a WA resident - I’m not certain. Part of the challenge is that there seem to be countless unwritten policies that the DOR follows, but you don’t know what they are. And different officials seem to think the rules are different. And unless you want to challenge it in court, they get to be right. And even if you do take it to court, they still likely get to be right, as in claiming a transaction in international waters in the Straight of JDF as a taxable Washington transaction.

 

[tiltrider1]

In this case OP is from Alaska. OP has not mentioned where he plans to use the boat. Let’s assume Alaska. His best course of action is to time the close of the transaction to correspond with his time schedule for heading to Alaska.

There are many legal ways to put together a delayed closing that can satisfy both the seller and the buyer.

 

[twistedtree]

In this case OP is from Alaska. OP has not mentioned where he plans to use the boat. Let’s assume Alaska. His best course of action is to time the close of the transaction to correspond with his time schedule for heading to Alaska.

There are many legal ways to put together a delayed closing that can satisfy both the seller and the buyer.

This does indeed sound like the simplest path. All you need to do is be in a position to get the boat out of WA and into Canada within 45 days of closing, and file the appropriate paperwork with WA as part of closing.

 

[DDW]

The holiday for having work done on the boat is real, but the paperwork is burdensome to keep completely legal. It is also an application for exemption, which potentially could be denied, then you are screwed.

Another possibility is to haul the boat and store it dry. The wording in the statues is accumulated time "in the waters of the State of Washington" and is plainly stated. Whether a judge would see it as plainly written as it seems to be, I don't know, but there is a huge dry storage industry in Anacortes depending on this interpretation.