I've noticed that in ads for some boats-especially in Florida- there is a disclaimer that the vessel is not for sale within the United States, or something to that effect.
I'm curious what the ramifications are. Tax breaks? To the buyer or seller?
Have there been any threads about purchasing outside of the US compared to inside?
Registered: 07/08/04
Posts: 1681
Loc: Down in Fraggle Rock
Probably tax breaks both to the buyer and seller, on a case-by-case basis. I don't actually know the ins and outs, but I suspect there's some sort of duty that you need to pay, depending on where the boat is registered. F'r instance, you can own a boat, live in Illinois, and register it in Wisconsin. There's a tax benefit to doing it that way, and as long as you don't physically have the boat in IL, you don't have to pay IL tax for the boat (but you need to pay WI). I suspect strongly that there are places like Bermuda and the Caymans wherein you register the boat to those locations and have a substantial tax benefit.
In California, if you take delivery of a boat more than X miles offshore, and keep it out of the state for a certain number of months, you can avoid paying sales tax on it. Quite a few purchasers of large boats take extended cruises to Mexico or Canada right after delivery.
I'm not sure if it ended up in the final version, but eliminating that exemption was part of the state budget that recently passed so you may not be able to do it any longer.
What is an Offshore Delivery? For many years clients have chosen to take delivery of their boat in a location outside of California, in order to use it in a location outside of California. One of the advantages of this practice is that the dealership is not required to collect sales or use tax (approximately 8% of the purchase price, depending on the county in which you purchase the boat). California requires that a retailer collect or a buyer of a brokerage boat pay a sales tax on the purchase. The only exception is when a client requests, and takes delivery outside of the state. This will keep them from paying the sales tax, but they will be liable for a Use Tax (coincidently the same amount as a sales tax) unless they follow very specific rules and did not “intend” to bring it back or to keep it out for the purpose of avoiding sales/use tax. Below you will find a list of 8 key summary points to consider and a list of 3 attorneys who specialize in this type of transaction. We highly recommend using an attorney to insure you follow the intent and letter of this tax code. This list is meant as a general guideline and should not be solely relied on to make your decision to take an offshore/ out of state delivery.
* The Purchase contracts (new or brokerage) must state that the offshore delivery as a contingency. * The purpose is not to avoid sales tax. * You should not keep your current slips or anything that could be argued that you intend to return to California. * Buyers must keep the boat out a minimum 90 days. * The client must keep all records of usage out of the state to verify it has been used not stored. There is no specific usage amount required by the state; however we suggest you use it as much as possible. * The owner can not use the boat or put equipment on it until he has taken delivery out of the state. * California Attorney’s who are experts in this tax code and others relating to your boat purchase. * Bill Dysart 619 231 4844 * Cris Wenther 858 457 3800 * Paul Trusso 619 2262628
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