Boat Purchase - Tax Question

dlochner · Oct 21, 2016

If you are working with a broker, ask him/her. Generally NY taxes things based on where they are delivered or used. For boats, the tax is collected when the boat is first registered. If you are not going to register the boat in NY, then you shouldn't have to pay any tax the boat, but you may end up paying tax on any services performed, like loading the boat on a trailer, prepping for transport etc.

Stu Jackson · Oct 21, 2016

Oh, no, another tax question!!!

People continue to confuse and mix up sales tax, use tax and property tax.

Sales tax is generally paid where you purchase the boat.

Use tax has many different names, so I can't answer that one for your example.

California has a yearly property tax, collected by the COUNTY where the boat is kept.

JTulls said:
but I'm wondering if I am also responsible for the NY sales tax or if the seller owes that.

If I buy something, I am responsible for paying the sales tax. Shouldn't be any different than going into a store. Does the store pay the sales tax for you when you buy an anchor?

rgranger · Oct 21, 2016

Pay CASH!

Jackdaw · Oct 21, 2016

Used? 99% of used boat sales are made private party to private party, the broker (if there is one) just gets a commission from the buyer's proceeds at the time of sale. You should NOT have sales tax collected. Each state has its own rules about what kind of taxes you pay when you register it. For instance in MN there is no sales tax collected on used boats.

rgranger · Oct 21, 2016

Something new I discovered on my most recent boat purchase....

In Virginia they get their sales tax when you try to register the boat. I'm not sure how VA handles it if the boat was purchased out of state.

Bob S · Oct 21, 2016

If it's documented you don't have to register it. At least here in MA. There is an excise tax paid to the town we keep the boat in.

Ted · Oct 21, 2016

Stu Jackson said:
Sales tax is generally paid where you purchase the boat.

This was not my experience. I purchased a previous boat in Connecticut and brought it to New York. There was no sales tax paid to Connecticut but New York collected it when I registered it in NY.

Jackdaw · Oct 21, 2016

Ted said:
This was not my experience. I purchased a previous boat in Connecticut and brought it to New York. There was no sales tax paid to Connecticut but New York collected it when I registered it in NY.

Correct. Many/most states do that as a cash grab, recognizing that most of these big transactions are person to person.

Gunni · Oct 21, 2016

rgranger said:
I'm not sure how VA handles it if the boat was purchased out of state.

They credit you for sales tax paid out of state...and then, with a few municipal exceptions start annual property taxing the daylights out of you!

Kings Gambit · Oct 21, 2016

Sales tax on items like boats and cars, and most on-line purchases, is paid to the state of your residence, unless you intend to use the item in the state of purchase. For example, if you bought it in New York and left the boat in NY, then you'd have to pay NY sales tax. If you buy in NY and bring it to California, then you pay the sales tax to California. For CA residents, you may have noticed that your CA income tax return asks you to report out-of-state purchases above a certain amount and used here, so they can be TAXED! The reason for this rule here now is that so many folks were going to Oregon to buy cars (no sales tax), and then bringing them back to CA where they lived and worked, and for a time, escaping sales taxes. The great state of CA is not going to let anyone escape paying taxes except for some adeptly using the convoluted "off shore delivery" tax-dodge scenarios in the case of some boats. However, CA has been cracking down on this as of late, I've heard people say.

capta · Oct 21, 2016

In my experience, sales tax is paid in the state where you buy the boat and then the state where you reside will subtract that from their bill if it is higher.
However a case can be made that you need not pay any tax where you purchase the boat if it is removed from that state within 30 days.
I think Cal is the worst state for chasing you for taxes they are not due, so be careful that you don't pay double. I took possession of a beautiful old classic Wm. Hand gaff ketch in Hawaii that had the gorgeous wood name plates with the home port of SF in gold leaf, so I had SF as her home port on the document.
At the time I was a resident of Hawaii and the vessel had never been to Cal while I owned her, yet Cal chased me for sales tax for over 5 years. They finally quit when my lawyer threatened them with a harassment suit, but it was over 5 years of threatening letters from Cal over money that they had no right to ask for.

Gunni · Oct 21, 2016

...well sorta. If you buy a boat in place that has no sales tax, like the State of Delaware or the District of Columbia and register and keep it there to avoid taxes then bring it to Maryland or Virginia, the state is going to want to see the original BoS and slap a sales tax on you.

Kings Gambit · Oct 21, 2016

Yeah-- the state of residence is going to tax it if that is where you use it, the same way all other such items are taxed if purchased within the state and used there, irrespective of attempts to game-out the system.

Ron20324 · Oct 21, 2016

Some states require you register and pay tax in the state of "principal use", which might not be your state of residence.

Don S/V ILLusion · Oct 21, 2016

Didn't John Kerry try that trick?

It's never a good idea in matters like this to depend on opinion. Why not ask both state tax authorities? Their opinion is probably better than any Internet forum.

dlochner · Oct 21, 2016

From the NY State horse's mouth:

https://dmv.ny.gov/registration/sales-tax-information (Note, this page references vehicles, the rules are the same for boats.)

If the boat is registered in NY, then you must show evidence of having paid sales tax or pay sales tax to the DMV when it is registered. If you paid sales tax elsewhere, then you may receive a full or partial credit for the sales tax.

So long as you don't register the boat in NY, you are not obligated to pay NY State (or county) sales tax.

Kings Gambit · Oct 21, 2016

Obviously, if one buys a boat, say in FL, and lives there for 11 years with the boat and then moves to CA, bringing the boat, then that person would not have to pay a "sales tax" in CA as long as s/he could show that it had not been purchased there, etc. But you'd still get to pay a different tax--a yearly property tax--on the assessed value of the boat. In CA, if the boat is USCG documented then it does not have to be registered though the DMV, so no chance to tax a prior sale there; but, once it's in a slip somewhere, the county assessor will come find you for its property tax @ 1 o/oo per year. This is not the same situation as living in California for 11 yr, going to FL to buy the boat, and then bringing it home to CA, trying to escape a sales tax, etc.

rgranger · Oct 21, 2016

Gunni said:
...and then, .... start annual property taxing the daylights out of you!

Oh yeah! I know about that....

Kings Gambit · Oct 21, 2016

Don S/V ILLusion said:
Didn't John Kerry try that trick?

A senator, Presidential candidate, and now Secretary of State from the great state of "Taxachusetts" as some say, caught trying to register his foreign-built custom yacht in Rhode Island, ostensibly to avoid paying a Massachusetts state sales (or other) tax.

Ironic.

At least that's the story heard in the press; who knows the truth? Too bad there was no secret video recording making the deal to publish in social media, and beyond, when he was running for President.