Ownership Change & Calif sales Tax

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rfrye1

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Jun 15, 2004
589
Hunter H376 San Diego
We are wanting to transfer ownership of our Documented boat from our personal names (joint ownership) to an LLC. Easily done with the USCG. BUT.......

I am worried that this will trigger some kind of sales tax flag (audit) with the State of Calif. I am sure they are looking for all the sales tax revenue they can get. I dont want to raise any red flags. Does anyone have an opinion?

Thanks. Bob
 
sailingdog

sailingdog

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Oct 22, 2008
3,502
- Telstar 28 Buzzards Bay
You really should check with a tax attorney about this. Checking with a bunch of drunken sailors when it comes to tax matters is probably not wise or recommended. :D

Are the joint owners of the boat also the joint owners of the LLC?? If so, then it probably shouldn't be much of an issue—since you're basically changing how you own it...rather than actually selling it, aren't you??? If the LLC has different owners than the boat, then it gets a lot muddier IMHO.

rfrye1 said:
We are wanting to transfer ownership of our Documented boat from our personal names (joint ownership) to an LLC. Easily done with the USCG. BUT.......

I am worried that this will trigger some kind of sales tax flag (audit) with the State of Calif. I am sure they are looking for all the sales tax revenue they can get. I dont want to raise any red flags. Does anyone have an opinion?

Thanks. Bob
Click to expand
 
rpwillia

rpwillia

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Sep 29, 2008
1,978
Catalina 310 #185 Quantico
Good quote for that

"Checking with a bunch of drunken sailors when it comes to tax matters is probably not wise or recommended. :D "


"To say Congress is spending like drunken sailors is an insult to drunken sailors." -- Ronald Reagan

It just seemed appropriate. :dance:
 
zeehag

zeehag

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Mar 26, 2009
3,198
1976 formosa 41 yankee clipper santa barbara. ca.(not there)
knowing kalifornikation as well as i do --prolly will affect it--ye might call a documentation specialist , such as dona jenkins, to find out. dona jenkins is in shelter island --they have all the answers ye might never need to know about documenting boats.
 
Rick Webb

Rick Webb

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Jun 2, 2004
3,653
Hunter 23.5 Fort Walton Yacht Club, Florida
Sell it for $1.00

Then let them tax the sale all they want.
 
C

Calif. Ted

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Jun 8, 2004
3,012
Catalina 320 Dana Point
No tax if no consideration is paid, but you must request a use tax clearance from the Board of Equalization. See their publication 52 page 12.
http://www.boe.ca.gov/pdf/pub52.pdf
The transfer of a vehicle or vessel to an existing corporation is not subject to use tax if the property is transferred to the corporation for no consideration.
Examples of [FONT=Myriad Pro,Myriad Pro][FONT=Myriad Pro,Myriad Pro]consideration [/FONT][/FONT]include cash, credits, shares in the corporation, promissory notes, the fair market value of any trade (including "even" trades), the cancellation of a debt, or the assumption of a loan.
If the corporation gives consideration for the vehicle or vessel, the transfer is subject to use tax based on the value of the consideration given.
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Rick

Rick

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Oct 5, 2004
1,098
Hunter 420 Passage San Diego
Speaking of taxes. I get the privelidge of paying 1% of my hull value each year to the state of california, which I am not a resident of, for the right to float it in the water! What is amazing to me is how it has held its value according to the state.... go figure. Good news is the money probably doesnt go to anything ocean.
At the risk of sounding like a drunken sailor, does anyone else have a similar situation? Back east maybe.

Cheers
 
C

Calif. Ted

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Jun 8, 2004
3,012
Catalina 320 Dana Point
Like you I'm also paying property tax on the boat and I also get to pay property tax called "propriatary use tax" on the slip I RENT from the county. That rate is also 1% of what they THINK the value of the square footage of water surface in my slip would be. California, of course.
 
Stu Jackson

Stu Jackson

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Feb 26, 2004
23,356
Catalina 34 224 Maple Bay, BC, Canada
One of the reasons we're paying property taxes here in CA is that we are also using the boats as "second homes" on our income taxes. I don't like paying taxes any more than anybody else, but I'd rather pay a small property tax than have the income tax benefits taken away.

In addition to sales tax, if you will be moving the boat, make sure you "resign" from your former county to avoid them continuing to charge property tax on your boat that is no longer there! Alameda County is notorious for this.
 
Brian D

Brian D

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Feb 17, 2006
5,274
Lancer 27PS MCB Camp Pendleton KF6BL
I too am paying property tax on property I don't own. I love my state. :(
 
P

Paul Cossman

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Jul 25, 2004
362
Hunter 42 currently in New Zealand
I'll bite.

Rick said:
Speaking of taxes. I get the privelidge of paying 1% of my hull value each year to the state of california, which I am not a resident of, for the right to float it in the water! What is amazing to me is how it has held its value according to the state.... go figure. Good news is the money probably doesnt go to anything ocean.
At the risk of sounding like a drunken sailor, does anyone else have a similar situation? Back east maybe.

Cheers
Click to expand
Hi Rick,

I live in Alaska and keep my boat in Newport Beach, CA, and pay around $1,200 per year in personal property tax. My (generally unpopular) opinion is that the taxes are justified. I've sailed and traveled around a fair number of third world countries. Quite often the harbors are dirty trash-filled neglected areas with poor sanitation and transportation facilities. It's very difficult to even find a way to dispose of trash that accumulates onboard, much less finding restroom facilities of any kind. In California, I use nicely maintained roadways, public restrooms, nice parks, and public trash receptacles. The harbor patrol ensures that my boat is not broken into and burglarized during my lengthy absences. I feel that these services are not free, and I pay no taxes that would otherwise cover the local services I enjoy.

And no, I don't enjoy paying out the money any more than anybody else. It just seems like it's fair.
 
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caguy

caguy

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Sep 22, 2006
4,004
Catalina, Luger C-27, Adventure 30 Marina del Rey
The Luger 30 I am buying was gifted to the PO who in turn in selling it to me for $250 for the boat and $250 for the trailer. He won't have to pay taxes on it. I am also paying $35/yr property tax on the Mac 25, and not complaining we have very nice harbors.
 
zeehag

zeehag

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Mar 26, 2009
3,198
1976 formosa 41 yankee clipper santa barbara. ca.(not there)
i am paying property tax and equalization taxes on 2 boats in san diego--lol----but a company like dona jenkins will be able to tell ye about the laws involved with the potential transaction and help you understand the laws. is a good idea to see her company for these transactions, as she is very very good at helping you avoid stiff penalties and fees and .......
 
J

John

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Jun 3, 2006
803
Catalina 36mkII Alameda CA
Right

Paul Cossman said:
Hi Rick,

I live in Alaska and keep my boat in Newport Beach, CA, and pay around $1,200 per year in personal property tax. My (generally unpopular) opinion is that the taxes are justified. I've sailed and traveled around a fair number of third world countries. Quite often the harbors are dirty trash-filled neglected areas with poor sanitation and transportation facilities. It's very difficult to even find a way to dispose of trash that accumulates onboard, much less finding restroom facilities of any kind. In California, I use nicely maintained roadways, public restrooms, nice parks, and public trash receptacles. The harbor patrol ensures that my boat is not broken into and burglarized during my lengthy absences. I feel that these services are not free, and I pay no taxes that would otherwise cover the local services I enjoy.

And no, I don't enjoy paying out the money any more than anybody else. It just seems like it's fair.
Click to expand
Good for you, Paul. You are right! There are no free lunches, as they say.
 
zeehag

zeehag

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Mar 26, 2009
3,198
1976 formosa 41 yankee clipper santa barbara. ca.(not there)
sailingdog said:
If the state sees it as a sale, rather than a transfer of property internally, they will tax it at fair market value regardless of the sale price.
Click to expand
the board of equalization will work with the purchaser--you send proof of your purchase price and they will accommodate you. they donot take more than the percentage of that purchase price unless you refuse to work with them. and they WILL atttach your bank account if you are delinquent..lol--i watched a neighbor go thru the delinquency procedure--now i have his old boat.....they took 6000+ for a 30000$ purchase==waaay over the .082 numbers they tell ye about ..lol...goood luck.
 
Rick

Rick

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Oct 5, 2004
1,098
Hunter 420 Passage San Diego
Paul I couldnt agree with you more. Sailing up and down the coast of california is a wonderful experience. We see every year when we go to Ensenada Mexico, the flip side of clean harbors. Boating is not free. The property tax I pay does not provide the things you mentioned. It goes into a completely different fund. It was actually raided by the govenator not too long ago to avoid IOUs. I just wanted to see if other boaters have this particular tax. I dont mind paying more for moorings, diesel, pumpouts, etc at all to have the stress relief that sailing gives me. Tis part of life.

Oh and John.... there are free lunches. Wife is a BA for company that provides commodities software for the free lunch programs in the public schools. The state/federal budget for the Los Angeles basin alone is bigger that Washington and Oregon combined. Free lunches! And it is a good thing for the kids!

Cheers
 
Rick

Rick

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Oct 5, 2004
1,098
Hunter 420 Passage San Diego
Bob I totally apologize for hijacking your thread. That was rude. Next time we see Andiamo out on the bay, I will buy a round!

Cheers
 
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