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razorback

Registry, taxes, blah, blah, blah...where does the line start?

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Hi guys,

 

Long time, no see. I used to be here all the time, but being in a no-sail location has sort of whacked my enthusiasm. Anyway, I've got a question that I figured would give me an excuse to check back in.

 

I'm helping a friend do a boat search. He wants a 40ish cat for the typical float up & down the ICW mission. The question here isn't about the boats, that's easy. Where I'm clueless is all the business about registries, taxes, buying boats abroad, etc. Facts that might be pertinent in this case:

 

  • The guy is a US/Canadian dual citizen. Not just on paper, he really is. He owns homes of roughly equal value in both countries and is active in communities on both sides of the border. Up to now, has usually spent his summers in PEI (Canada) and winters in Cincinnati (USA). (Yes, I know, anybody that can afford it shouldn't spend winters, or arguably any other time, in Cincinnati. That's a different thread.)
  • The boat will, as mentioned, migrate mostly up & down the East Coast, vaguely between PEI and however far south he feels motivated to take it.
  • He won't be on it full time, will be on it for a while, then find a place to park it for a while, then back to it as opportunity presents. Always in a marina, he and his lovely wife are not going to spend a ton of time on the hook, I'd guess.
  • If I had to pick a location where it would spend the most time, I'd say Florida.

So obviously, the question is whether some of the boats advertised at attractive prices across the Caribbean, but marked 'Not for sale to Americans...' would be available in some kind of advantageous terms to somebody in his situation. I'm really just trying to figure out whether to scratch these boats of his list or not.

 

Anybody got a link to wherever the line starts for learning what you need to know about this sort of thing? How about a helpful broker type?

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They actually don't say not for sale to Americans.

 

The verbiage is "not for sale to US residents while in US waters".

 

This means that the US duty has not been paid so the boat can't be sold to anyone (citizen or not) living in the US. There are workarounds for this.

 

The Florida Yacht Brokers Association (now the International Yacht Brokers Association) is sponsoring legislation to have this changed. It appears to have a good chance of success.

 

Very few boats fall into this category.

 

Purchasing the boat involves dealing with USCG documentation (optional), State registration and State Sales/Use tax. Most States have different rules but, simply put, the State where you purchase the boat will want sales tax and the State where you use the boat (States have different rules to establish this) want Use tax. Note that the State that wants the Use tax will generally give the buyer credit for whatever sales tax, if any, he has paid elsewhere.

 

USCG documentation is a sort of Federal registration. It does not alleviate the sales/use tax obligation. USCG registration is useful as it establishes clear title throughout the vessel's life. It will be required by most banks for a marine loan.

 

USCG documentation is also useful when traveling out of the country as the vessel is associated with the Federal government not a single State.

 

There will be exceptions to all of this and folks will chime in with their personal anecdotal situations but the above is an accurate overview.

 

BTY there will be some telling you that you can avoid sales tax by registering the boat in a State that doesn't charge it or charges a minimal amount. That will be true if the boat is actually used there. If the boat is used elsewhere than the use tax kicks in as above. Again, it is important to note that each State has different rules for determining "use".

 

Good luck.

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Thanks guys. It's actually far simpler than I had feared & makes sense. If the rest of my week goes that easy, I'm a happy camper.

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The guy should definitely get US registration rather than Canadian registration if possible.

 

Travelling through the US on foreign registration is painful. Sailing Canada with foreign rego is relatively painless. I "sailed" from the East coast on Australian rego from Canada to Key West.

 

He will need state rego as well. Some states are very cheap (I had several boats registered in Minnesota) but it is probably worth coughing up the money for Florida rego because if your mate does not he will be playing tag with the Florida authorities. Cost of rego is minimal compared to cost of ownership.

 

A good broker will make any sale/transfer of a foreign flagged boat pretty painless. Can provide the name of the Florida based one I used for a similar transaction if you can't find one.

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He will need state rego as well.

 

 

Just to clarify, he should register either with a state or document it with the Coast Guard, not both. If he's planning on getting financing then he might have to document it, speak to the lender well in advance.

 

I don't know the relative advantage of a Florida registration over any other but I can imagine that there are tax implications. A 40+ ft cat could be into the $0.5m range and the taxes could be significant. He should speak to his accountant or find one who knows something about boats.

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He will need state rego as well.

 

 

Just to clarify, he should register either with a state or document it with the Coast Guard, not both. If he's planning on getting financing then he might have to document it, speak to the lender well in advance.

 

I don't know the relative advantage of a Florida registration over any other but I can imagine that there are tax implications. A 40+ ft cat could be into the $0.5m range and the taxes could be significant. He should speak to his accountant or find one who knows something about boats.

 

 

Some states require a state registration. and the additional USCG registration is optional. Florida is one that requires a state registration even if it is documented and they have a $18k max on the tax

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He will need state rego as well.

 

Just to clarify, he should register either with a state or document it with the Coast Guard, not both. If he's planning on getting financing then he might have to document it, speak to the lender well in advance.

 

I don't know the relative advantage of a Florida registration over any other but I can imagine that there are tax implications. A 40+ ft cat could be into the $0.5m range and the taxes could be significant. He should speak to his accountant or find one who knows something about boats.

Not quite correct. It is either USCG Documentation or State Title, not both. You can have a USCG Documented vessel Registered with a State, and many states require this.

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