Buying a boat in MD and sales tax

[Chuck34]

Ok, what if....
I buy a boat in MD with the intention of moving it to VA. How long will the good people in MD govt let me keep it there before they make me pay MD sales tax?
If I'm not mistaken, MD tax is 5% where VA is only 2%.
I haven't bought it yet, just looking, but if I did buy it, I won't be able to move it until the first week of April.

[indimini]

Depending on how much you are spending, it is worth noting that MD max tax is $15,000 on the boat.

[Chuck34]

Let's say the boat is around $80k. VA tax would be $1600. MD would be $4000. I'm cheap and really don't want to spend an extra $2400.

[CaptJamesCook]

If you are not a resident of MD the sales tax is only 2% but you have to leave it there I think for 6 months min.

[Chuck34]

Originally Posted by CaptJamesCook

If you are not a resident of MD the sales tax is only 2% but you have to leave it there I think for 6 months min.

I was on a MD website looking at FAQ's and didn't see anything about being a resident vs non-resident.

[sailingunity]

We were very concerned about this as well we when bought our boat in Maryland. We closed in August and moved to VA in October. However, it seems like enforcement is spotty, I wouldn't stress about it too much. When you buy the boat you'll sign a statement saying you plan to leave Maryland.

I hear Florida is the worst.

[mogulskibum]

Maryland has an excise tax that is due when you register the boat, this is different than a sales tax that is due when a boat is sold or purchased.

That's a subtle, but important point.

Your question is better worded: how long can I leave my Virginia registered boat in Maryland before I'm required to register it in Maryland?

The answer to that is 90 days, unless you can prove that you will use the boat in Virginia for more of the year than you will use it in Maryland.

Boat Registration

If it were me, I'd take my time registering it in Virginia, and I certainly wouldn't put the new VA registration numbers and decals on it until January, when you're within 90 days of movement anyway.

Something to be aware of though: Maryland does not have an annual personal property tax. Virginia does (at both the state and county level). Depending on the personal property tax mill levies and how long you plan on keeping the boat/living in Virginia, paying 2% more today might actually be the better deal in the long run.

When I lived in Virginia, I kept my boat in Maryland and registered in Maryland for exactly this reason.

[Chuck34]

Mogulskibum,
The boat I'm looking at is Coast Guard documented and I will keep it documented. Unlike MD, VA does not require documented boats to be registered, it is optional. So, if I buy it, I will do the CG paperwork, and from what I've been reading, it will take 2-3 months to get my Certificate of Documentation.

[Suijin]

Originally Posted by mogulskibum

Your question is better worded: how long can I leave my Virginia registered boat in Maryland before I'm required to register it in Maryland?

The answer to that is 90 days, unless you can prove that you will use the boat in Virginia for more of the year than you will use it in Maryland.

This.

DNR is variable in their enforcement of this, but they do run around and check boats. It likely varies in direct relation to boat population. In Annapolis they can be fairly aggressive/timely. Move your boat elsewhere and it's probably more relaxed.

[stormalong]

If IIRC, when I lived aboard in MD this was a use tax. If your boat is hauled out this does not apply. So if you buy a boat and leave it on the hard for the winter you should be safe from the tax bandits.

Check it out.

[goodnumbers64]

Not sure if this is still true, but MD did not used to count the days when a boat was out of the water. They did not consider that to be using the boat.

[svHyLyte]

We purchased our current yacht in Annapolis (through Annapolis Yacht Sales) in January of 2002. As we were not residents of Maryland, and the yacht was to be removed to Florida shortly after the sale closed, our paperwork included a Maryland form DNR B-110, "Certification of State of Principal Use" certifying that the state of principal use would be Florida. With this, we were relieved of having to pay tax in Maryland although the closing/documentation agent, Gloria Rector Documentation Services, did collect the statutory Florida sales tax. Subsequent to closing, it took about a month before the yacht was loaded up and moved to Florida.

FWIW...

[derfy]

Here is the deal in Maryland. [disclaimer - never trust advice for "sea lawyers" on CF, but attached are the reference articles I found].

I was advised by a yacht broker there that I had 90 days to remain in Maryland if I bought the boat in Maryland. That turned out to be complete BS, and is a tale often repeated there. They evidently train all the sales agents there to repeat this falsehood.

Here is the real deal...

"A boat purchased in state [Maryland], but leaving for another location:

Such boats can file a Maryland B110 form with the Maryland Department of Natural Resources, and so long as the boat leaves the state in short order is principally used in another state, no tax is owed to Maryland. If the destination is international or no or low-tax state (Delaware, Virginia, Rhode Island, for example) then no tax will be due at purchase and no tax will later be due for the use."

So, 1) you have 30 days to file your B110 after the sale, 2) you have to bug out of Maryland in "short order" [how is that for a legal standard?], and 3) you have to spend more time in another state than you do in Maryland - or else they can get you later and will.

The alleged 90 days is how much time you have to visit Maryland if you are registered in another state and pass through, before they consider you a "Maryland boat" and take their 6%. So don't linger too long in Maryland.

Virginia tax, BTW, varies according to county. Hampton, for example, is $.000001 per $100 of assessed value (a special rate approved by voters there to incent boating - it worked for me). Other counties are several percent.

Florida is more onerous than Maryland. They take around 7-8% Sales/Use Tax (6% plus local 1-2%) on a new boat purchased in Florida. There is a temporary exemption for out-of-state buyers, buying only from registered FL Brokers (not individuals). You can then have 90 or up to 180 days to escape Florida.

If a boat is purchased out of state and brought into Florida within 6 months of the purchase, then FL considers it a "Florida purchase" (but will credit you whatever tax was paid in the state of purchase). Foreign sales are subject to Florida use tax whenever the boat comes to Florida. Florida requires to register in Florida after 90 days for boats over 5 tons. Registration fee is not the same is the Use Tax ... just a nominal annual fee. That is fair, IMHO.

North Carolina has a 3% Sales/Use Tax on boat purchased there, and it caps it $1500. A pretty good deal. NC seems very boat friendly.

Delaware and Rhode Island have no Sale or Use Tax and are the most boat friendly (if you don't mind the winter weather). The reason these other states are so aggressive is to get people who buy/register in Delaware or RI and bring their new boats home to Maryland or Florida.

I don't know about the other states, as I am not considering them [and disclaim all info provide herein].

The bottom line is you have to a) choose a "home base" where you plan to keep the boat the most, and pay the state tax there, or b) keep moving and keep records (dockage receipts, fuel receipts, etc), not staying anywhere more than 90 days.

If I am a resident of a state, it is reasonable for me to pay the tax there. I chose to live there, knowing the deal, and I should pay - in my humble opinion.

If I am not a resident, and move around a lot, I should pay reasonable fees in each state (ie sales tax of fuel and dockage, boat registration, etc).

If I get somewhere I like and spend more than, say 3 months there, I should plan to make that the home base for boat, and pay the state Sales/Use Tax. I have essential established a second residence in that state.

You should pay attention to this. You can buy a lot of new rigging, dockage, or beer for what you pay these states in tax.

Fair Winds

[Chuck34]

Derfy, thanks for that.
I live in VA and don't mind paying the 2% sales tax for VA. I just don't want to get hit by the 6% MD tax. I just need to know how much time MD will give me before I move the boat to VA.

[derfy]

Originally Posted by Chuck34

Derfy, thanks for that.
I live in VA and don't mind paying the 2% sales tax for VA. I just don't want to get hit by the 6% MD tax. I just need to know how much time MD will give me before I move the boat to VA.

You have 30 days (B110 filing period) plus whatever they consider "short order".

That is actually the rule.