Sales tax

[tiltrider1]

If you are a California resident and you take possession of the boat out of state and you register it out of state you get the exemption. If you are an out of state resident and you buy a California registered vessel you will pay use tax to the state of California, they will credit you for any sales tax you pay to your own state. Since Oregon has no sales tax you will pay the full amount to California. If you don't believe this just call a California Yacht broker and ask them.

 

[tiltrider1]

How does California inforce this? First when you submit the title to Oregon they won't issue a new title until California signs off. Second, California will send a bill in the mail. Don't pay the bill. They then turn it over to collections. Don't care about your credit and don't plan to get a speeding ticket in California and don't plan to sell the boat. You win! Other wise you loose.

 

[Seevee]

We are thinking about doing something like this, but it's because of state income tax, not sales tax.

We plan to sell our house in the next 6 months and move into a rental. When I retire in 4 years, we will be cashing out one of our retirement accounts to buy our retirement home. Prior to this, we may set up residency in Florida. This way, the withdrawl from the retirement account is not subject to state income tax in our current state.

We plan on living on the boat we buy (hopefully in the next 2 years, yes we will pay sales tax on the boat) and living in Europe for about 2 years. We then will set up residency somewhere in the U.S. and likely buy our retirement home.

For the OP, I would ask have you considered state income tax as well as sales tax?

Jim

Jim,

Sales tax for a boat and income tax have nothing to do with each other. One is a tax for making money and the other is a tax for spending money.

As for residency, I could argue to make your move now and establish FL residency. Buy, rent or get something down there. Rent a room from a friend, get your license, bank accounts, etc. there. Or perhaps find another state that's user friendly for retirees, but waiting to the last minute could have some issues.

Search out residency requirements and plan accordingly, especially if your goal is to move out and be a boat nomad.

Also, just moving into a rental may not help much, but it's a step.

 

[Seevee]

How does California inforce this? First when you submit the title to Oregon they won't issue a new title until California signs off. Second, California will send a bill in the mail. Don't pay the bill. They then turn it over to collections. Don't care about your credit and don't plan to get a speeding ticket in California and don't plan to sell the boat. You win! Other wise you loose.

My limited experience and from what I've heard, Kalifornia is brutal. I sold an airplane once, and delivered it to the buyer in Kalifornia, and they sent ME a tax bill. (actually sent the owner, I don't own anything in my own name). Personally I had no liability so I sent them a very nasty letter and enjoyed sending it.

It's too bad, it's such a nice state with so many problems and issues.

 

[BandB]

Jim,

Sales tax for a boat and income tax have nothing to do with each other. One is a tax for making money and the other is a tax for spending money.

As for residency, I could argue to make your move now and establish FL residency. Buy, rent or get something down there. Rent a room from a friend, get your license, bank accounts, etc. there. Or perhaps find another state that's user friendly for retirees, but waiting to the last minute could have some issues.

Search out residency requirements and plan accordingly, especially if your goal is to move out and be a boat nomad.

Also, just moving into a rental may not help much, but it's a step.

You don't need a room to establish Florida residency. Just an address and many do it through St. Brendan's Isle. Now, that comes with one caveat. Establishing residency in one state does not mean another state will recognize you as no longer being a resident. You must also clearly take steps of leaving it. We went through that in moving from NC to FL and we did have our NC tax return audited for that year since we lived in both NC and FL but had far more income in FL.

 

[hfoster]

In my experience the most a second state tags you for is the difference in the 2 amounts of sales tax.

If the statevyou bought in charges 5% , but your home state where you register the boat charges 7%, you cough up the difference.

I think some states forgive the difference if the boat has been kept out for a certain length of time.

Is this what you were refering to? I havent heard of a state looking for tax beyond what they would charge just in that state.

From what my tax attorney tells me if you buy a vessel in one state that has sales tax and if your state has a sales tax, then you pay the sales tax to your state. Then your state forwards a % of what you paid in sales tax to the state you bought the vessel in.

Both states cannot charge their full sales tax on the same item that you bought. It would be double taxations. Thus the state you live charges the sale tax (If your state has sale tax.)


Where I live the sales tax is 6.5 % on a new vessel and 5.75% 0n a used vessel. If I buy a vessel in a state that has a 7% sale tax, Ohio will send the other state a % of sale tax you paid. That is the way it work in Ohio.

As far as the other state coming after you for the difference? I guess the could. However I believe it would fall under double tax taxation due to the fact that you pay the full sales tax in your state. With that said, it is always a good idea to chat with a tax attorney when buy a vessel out of your state.

Cheers.

H.

 

[Seevee]

You don't need a room to establish Florida residency. Just an address and many do it through St. Brendan's Isle. Now, that comes with one caveat. Establishing residency in one state does not mean another state will recognize you as no longer being a resident. You must also clearly take steps of leaving it. We went through that in moving from NC to FL and we did have our NC tax return audited for that year since we lived in both NC and FL but had far more income in FL.

BandB,

Good point, but the post office box address doesn't quite give the credibility of a concrete home. But, one could make a strong argument with St. Brendan's that they reside there in a boat.

Another really tough area, is if you collect W2 income in that state.

 

[BandB]

BandB,

Good point, but the post office box address doesn't quite give the credibility of a concrete home. But, one could make a strong argument with St. Brendan's that they reside there in a boat.

Another really tough area, is if you collect W2 income in that state.

PO Address won't do it. St. Brendan's will in FL. In some states, mailbox services will and in others they will not. FL is glad to have as many residents as want to be. St. Brendan's doesn't need an argument. It has long been accepted in FL.

If you collect W-2 income in the old state you'll have to go to great lengths not to be considered a resident. I quit my employment in NC immediately, as did my wife. I had an office address in FL and provided consulting services including to my former employer for a couple of months. I still consult about one day a month with the parent company.

Here were our steps.

For FL Residency
-Physical address, we bought a condo
-Driver's license
-Homeowners and Auto Insurance
-Transfer title of car
-FL Bank accounts
-FL PO Box for mail

To relieve ourselves of NC Residency
-Sold one car, moved the other to FL
-Moved all personal belongings and furniture
-House on market, sold one week later
-Sold boat in NC.
-Resigned jobs

We also got advised by a FL attorney and accountants in both states.

All of part one, establish FL residency, can be done at St. Brendan's. However, Part two, removing signs of Previous State Residency can be more difficult.

 

[Seevee]

PO Address won't do it. St. Brendan's will in FL. In some states, mailbox services will and in others they will not. FL is glad to have as many residents as want to be. St. Brendan's doesn't need an argument. It has long been accepted in FL.

If you collect W-2 income in the old state you'll have to go to great lengths not to be considered a resident. I quit my employment in NC immediately, as did my wife. I had an office address in FL and provided consulting services including to my former employer for a couple of months. I still consult about one day a month with the parent company.

Here were our steps.

For FL Residency
-Physical address, we bought a condo
-Driver's license
-Homeowners and Auto Insurance
-Transfer title of car
-FL Bank accounts
-FL PO Box for mail

To relieve ourselves of NC Residency
-Sold one car, moved the other to FL
-Moved all personal belongings and furniture
-House on market, sold one week later
-Sold boat in NC.
-Resigned jobs

We also got advised by a FL attorney and accountants in both states.

All of part one, establish FL residency, can be done at St. Brendan's. However, Part two, removing signs of Previous State Residency can be more difficult.

Good post.

 

[Rufus]

OK, another related question....

We purchased our (documented) boat in Texas many years ago and moved it to Wisconsin where we paid the tax and have it registered. We still live in Texas. The boat spends the winter months sitting in a storage building in Wisconsin. For the three summer months it is typically in a slip in Michigan. We're thinking about moving it to Michigan for winter storage as well. Any tax issues? Wisconsin doesn't have clue where the boat resides at any given time...they just like the bi-annual registration fee. What about Michigan? How would they even know...or care?

 

[psneeld]

So far, there is a bunch of info I either am misinterpreting or disagree with.

If talking thousands of dallars in possible taxes, I suggest calling a vessel title service to get better info (one in each state you are dealing with), and if talking tens of thousands in possible taxes, get an appropriate attourney.

I have bought and registered in several different states and some of the info posted so far does not apprear to be entirely correct. I foudt more posts will make it clearer.

 

[BandB]

So far, there is a bunch of info I either am misinterpreting or disagree with.

If talking thousands of dallars in possible taxes, I suggest calling a vessel title service to get better info (one in each state you are dealing with), and if talking tens of thousands in possible taxes, get an appropriate attourney.

I have bought and registered in several different states and some of the info posted so far does not apprear to be entirely correct. I foudt more posts will make it clearer.

I fully endorse what you've said and once again suggest a documentation service (which you refer to as a vessel title service). If enough money involved, then verifying their answer through an attorney or accountant in the state in question. They deal with documentation and registration daily and know the intricacies that seem very minor but could cost thousands.

A lot of general information given here but each state is different and you need specific information to the states you are involved with and to your situation including job, work location, home location, other assets.

 

[JLD]

Jim,

Sales tax for a boat and income tax have nothing to do with each other. One is a tax for making money and the other is a tax for spending money.

As for residency, I could argue to make your move now and establish FL residency. Buy, rent or get something down there. Rent a room from a friend, get your license, bank accounts, etc. there. Or perhaps find another state that's user friendly for retirees, but waiting to the last minute could have some issues.

Search out residency requirements and plan accordingly, especially if your goal is to move out and be a boat nomad.

Also, just moving into a rental may not help much, but it's a step.

Sorry if my post wasn't clear.

Just trying to make the point that if one plans on being a nomad, then perhaps they should remember that most states will tax their income where they reside. Some states may also have personal property tax on boats as well. Thus, perhaps there is more to consider than just the payment of sales tax on the purchase of the boat if one plans on being a nomad.

After living in out house for the past 24 years, it is time for us to sell. We plan on renting a couple of years until I retire. Just before I retire, we will set up residency in a state that doesn't charge income tax so that we can cash out one of my retirement accounts.

Then we will spend the next 18 - 24 months travelling to Europe and travelling the east half of the great loop, running down to Key West and over to the Bahamas.

After that we will probably buy our retirement house.

Jim

 

[tiltrider1]

Sales tax laws are more complicated than you think. If an Oregon resident buys a California registered boat they must pay California sales tax, even if they take possession of the boat in Oregon and register it in Oregon. Talk to an expert first.

Yep! I started with the above advice. Talk to an expert first.

 

[tiltrider1]

Do not count on a title service for your sales tax advice. Title services or escrow services do not collet or pay sales tax. The broker collects the sales tax in most cases and they are not tax experts either.

 

[psneeld]

Not always necessary to talk to experts first, but once a question becomes complicated to the point where forum advice is all over the place, it becomes hard for anyone poster to clear the air.

At that point, break free of a particular thread until a few basics are settled and start again. That way the mass of bad advice or incorrect suggestions can be ruled out with specific references..

 

[BandB]

Do not count on a title service for your sales tax advice. Title services or escrow services do not collet or pay sales tax. The broker collects the sales tax in most cases and they are not tax experts either.

They may not collect sales tax, but the documentation services here are expert in knowing the tax implications of all the possibilities as tax savings are one of the reasons many owners turn to them.

 

[FF]

Some states want a use tax for wetting the bottom in their state waters.

In CT a CT sticker , and fees , is required just for use after a certain number of days.

 

[BandB]

Some states want a use tax for wetting the bottom in their state waters.

In CT a CT sticker , and fees , is required just for use after a certain number of days.

Most states require registration after a certain number of days. Most common is 90 days but many are 60 days. Those requirements are largely ignored but some states aggressive in checking marinas.

 

[kchace]

What state will the trawler be registered and kept / used in? Even if your trawler is documented as opposed to registered, the state you call home will want sales tax. If living aboard, you probably want to register it in the state you will be living in. Some states have laws requiring the equivalent of sales tax if they are your primary use state or reside in the state more than a certain number of days in a calendar year.

Ted

This.

 

[Art]

Best to talk with a knowledgeable tax attorney. Regardless, the authorities will be after for any use tax (same as sales tax but purchased from a non-business entity) on the boat's purchase if your new boat will be in a boat-purchase-taxing jurisdiction.

In general, taxing authorities assume if you purchase anything, you can also afford and will pay the assessed taxes.

That's the cost of "civilization" and supporting those unable to fully contribute to society.

While I purchased a boat from China, I paid use tax to the State of California equivalent to a brand-new, mid-sized automobile.

Well put!

 

[Bay Pelican]

Legal and proper avoidance of sales tax can be done. I bought Bay Pelican in 1999 and have yet to pay sales tax. She has been registered in Illinois as well as Florida. I have had to make sure I have not run afoul of any state's "residency" requirements during the 10 years we cruised in the US.

The critical thing was determining the requirements of each state and then making sure that I did not violate the law. In a couple of states I got written statements from the appropriate authority that my storage of the boat in that state would not generate tax treatment. In many states storage or repair are not counted towards "residency".

I must say that I never tried to get away with anything as in they won't catch me. I followed the letter of the law.

 

[Wxx3]

Hi all
New to forum and have a sales tax question I live in NY state and
Have an 8 percent sales tax, when purchasing a used
Trawler will I have to pay the tax
I will be selling my house and living on board travling

Me too.

Here is the rule, if the boat is ever in NY, you must pay the full sales tax.

If NEVER in NY, not once, you are not liable for tax.
You may need proof the boat has NEVER been in NYS.

All this information is on the NYS web site

Good luck