Buy US Boat, De-Register, Register in Own Country - How Long Can it Stay in America?

[nickj]

I guess my condensed subject says it all... If I buy a boat in the USA, de-register it with the USCG and re-register it in my country of origin, how long can the newly registered boat stay in the US with it's foreign ensign?

Thanks!

[s/v Jedi]

Ni Nick,

That depends on the state. We bought Jedi in Florida and re-registered her in the BVI's. We did not want to pay the Florida sales tax. They put some stickers on the boat showing that we were allowed in Florida for 90 days (after that, the tax would have to be paid). At the same time, you get a cruising permit which is valid for one year. So now, you have 3 months in Florida and 12 months total in the USA. In some cases (boat built in the USA and registered in a country that the US has a agreement with) you can extend the cruising permit. In all other cases you have to leave the US and come back for another permit (that would be either Bahama's or Canada on the east coast).

I understand that in some states there is no sales tax on boats??!! If so, you could keep the boat there as long as the cruising permit(s) allow.

ciao!
Nick.

[mesquaukee]

Delaware is a state which has no sales tax (as of a few years ago).

[Sailndive345]

Originally Posted by s/v Jedi

Ni Nick,

That depends on the state. We bought Jedi in Florida and re-registered her in the BVI's. We did not want to pay the Florida sales tax. They put some stickers on the boat showing that we were allowed in Florida for 90 days (after that, the tax would have to be paid). At the same time, you get a cruising permit which is valid for one year. So now, you have 3 months in Florida and 12 months total in the USA. In some cases (boat built in the USA and registered in a country that the US has a agreement with) you can extend the cruising permit. In all other cases you have to leave the US and come back for another permit (that would be either Bahama's or Canada on the east coast).

I understand that in some states there is no sales tax on boats??!! If so, you could keep the boat there as long as the cruising permit(s) allow.

ciao!
Nick.

Since a good friend had to go to court over this (tax issue) against the state of Florida, I thought I'd add to Nick's post:

If you have a situation where the boat requires service to become operational; i.e., engine trouble that needs to be addressed before you can move the boat out of state, etc... You ought to contact the state w/in the initial permit (90 days or whatever) and receive an official extension. Neglecting to do this may cause you all kinds of grief

If you bring a boat into FL from a state that already charged you tax, it is likely that FL will not bother you by asking for their 'cut' - except, if the boat came from a state that charges a 'symbolic' fee (Portsmouth, VA - 1 cent annual registration/tax on any boat -and/or New England states)

Good luck!

Sailndive

[nickj]

Thanks everyone.

Ok, I have a feeling this tax issue is unavoidable, so maybe I should just pony up and pay it. The boat is in CA, and I think sales tax is 8%. How do they value the boat, is it from the bill of sale?

Also, regarding cruising permits. I recently had a UK boat in the USA, and was in American waters for more than 12months. My cruising permit expired, and customs in Hawaii wouldn't give me another one, so I bought a user-decal for $25, and had to report my whereabouts - However, it seemed there were no issues my being there longer, however I haven't read anything official about that.

My brother is American... I wonder, perhaps I can just transfer the USCG registration into his name? Maybe he can 'own' 51% of it? Would that work?

Thanks! Nick.

[Pblais]

OK, I have a feeling this tax issue is unavoidable, so maybe I should just pony up and pay it

The situation is also fluid. What someone did even last year means little next week. If you plan on sticking it out some place then do the homework before you get there. Each state in the US has their own tax time clock and a reputation for being aggressive. You don't mess with the rules and expect to win. FL and MD are aggressive states but the others can learn. In times of economic hardship don't expect states that didn't used to be aggressive to slack off - they need the money right now. Collecting from folks that should have paid is an idea most residents won't feel bad about if they think they won';t get a tax bump.

Just because I wouldn't turn you in does not mean I would feel sorry for you if you got caught. If they catch you - they don't let go. At least verify the rules BEFORE you go! Legal advice you get on the Internet is worth less than you paid for it.

Taxes are a universal concept. You owe because you do and you can be fined because you should have known plus pay penalties. It is the same in the US or the EU or any place else you travel.

You are required by law to know the rules. This is a basic concept in Cruising and applies to everything.

[dohenyboy]

to avoid the sales/use tax you would have to take delivery offshore then take it immediately outside the state.
http://www.boe.ca.gov/sutax/faqex.htm
As a practical matter, what this means is that if you sign the contract outside the 3 mile limit, and tell the broker you will be registering it abroad (I would suggest you have the transfer done by a documentation company in escrow) then the dealer will not make you pay sales tax. Then, some time later you will get a letter from California asking for proof (like marina receipts) that after the sale and for 12 months afterwards, you kept the boat outside California. Of course, if you never come back to the USA, then what do you care about a letter from the BOE?

As for the US customs issue, probably the right way is to get the transfer done to the foreign flag, then take it off the USCG and leave the US, go 12 miles out and clear in again at a US port of entry. the problem you have is that during the time period you are waiting for the new documents, you cannot use the vessel. if I were you I would go in person to the US customs people and ask them.

[s/v Jedi]

This thread is now filling up with incorrect info. It is perfectly legal to buy a boat in CA with the intention to take it out of the state and register it elsewhere, in which case you do not have to pay the sales tax. That is the law. The details are how each state handles this and as we have done this in FL I wrote that they give you 90 days to leave the state. That is more than enough time to register elsewhere (we took 10 days to register in Tortola, BVI) and get a cruising permit. Next thing yo do is sail to somewhere out of that state (another state or another nation) and check in there. Buy some fuel and have them put your boat-name on the receipt. We sailed to Bimini, Bahama's and didn't get fuel. I just sent a copy of the Bahama entry-form to my broker who filled out the state forms and mailed them in. Done.
We never went back to FL but you can.... just check with your broker how long you need to stay away but basically you should be able to come back the next day because you have a cruising permit from the federal government which protects you against any taxes/fee's etc. from any state for the duration that the permit is valid. In other words: the cruising permit over-rules any local tricks to get your money and it is a free document. The president of the USA gives you the permit because he likes visiting yachts to feel welcome in the USA, something not always understood by the individual states....

This would apply: FAQ - Use Tax Exemptions or Exclusions - Board of Equalization
and this: http://www.boe.ca.gov/pdf/reg1620.pdf

I quote from that last link:

If title to the property sold passes to the purchaser at a point outside this state, or if for any other reason the sale occurs outside this state, the sales tax does not apply, regardless of the extent of the retailer’s participation in California in relation to the transaction. The retailer has the burden of proving facts establishing his right to exemption.

When the boat is registered in another state you can't bring the boat back to CA without paying use-tax. But when it is foreign flagged and you have the cruising permit you can.

So, all you need to do is find out how much time after closing you get and make sure you leave the state before that term ends. That should not be difficult. If your boat can't sail because work needs to be done: there are special arrangements for that but like someone else posted you must do that officially. Your broker (and probably the surveyor too) can take care of that for you. I just read that this is allowed in CA too.

Your broker really should help you with that, it's his job and he is getting paid for it.

good luck,
Nick.

[bobsadler]

i did this in north carolina and paid no tax. the broker checked with the coastguard and all they said was let us know when you're leaving. as a precaution i registered the boat in n.c. but that didn't involve a tax payment and, as i remember, was a very modest amount.