Paperwork & Red Tape & Ignorance!

[j-hood]

Howdy all. Happy Solstice.

I close August 4th on my first boat and I have a couple of questions to which I have not yet found answers. I will be purchasing the boat for cash (certified funds, to be technically accurate). I have been aboard several times and have had the boat surveyed and my insurance is quoted and ready to go.

Here's the red tape that I need to figure out:

(A) Is a boat title like a car title? I mean is it a piece of paper that we can sign on the tailgate of the car along with our Bill of Sale as we exchange title-for-funds?

(B) Can anyone tell me where to figure out tax implications? I am a resident of Washington DC purchasing an Alaska-registered (and USCG documented) boat that is in Virginia, is owned by a couple from Colorado, and I will be moving it to Maryland. I can't even figure out what taxing authority I should try to evade.

All for now. Thanks for the help and the entertainment.

[Scott Berg]

Finally a question I can answer!

It's a bit complicated... Are you using a broker (in VA sales tax isn't traditionally charged on casual sales between individuals). Maryland will want 6% sales/use tax at the time of MD registration regardless of documentation status--it is now capped at $15,000...
DC doesn't assess taxes on documented vessels
VA has a property tax that most counties assess on boats stored there
Be sure to get a USCG bill of sale a shave the document signed over by the seller (and make sure the seller's name, not a corporate name, is on the document).

Hope this helps.

[j-hood]

Hmmm. No broker, it is a private transaction. It will only remain in Virginia for a week or so as I work on critical systems to prepare for the move. So I guess Maryland is the only relevant jurisdiction? Register the boat, pay the fee. Is it ok to do that after I sail her up to her new home?

Any thoughts on the title issue? I will look up the USCG BoS.

[Scott Berg]

You need to register in MD after 30 or 90 days after ariving depending upon which part of the code you fall under


Good luck and congrats on the new boat

[j-hood]

Thank you, in advance.

[skipmac]

First the tax issue.

Depends.

Most states will try to collect sales tax on a vessel sold in that state. Most will allow a minimal amount of time to remove the vessel and be exempt from sales tax in that state.

Then you have to look at the rules of the state where you and/or the boat will reside. Most states will want you to pay sales tax on a boat that is moved to or lives in that state but there are many exemptions here like:

- you resided in another state, purchased, owned and used a boat there and later moved (you and/or the boat) to a different state. Most states will not require you to pay sales tax on a previously owned boat.

- you paid sales tax on the boat in another state. Most states will give you credit for that but you may have to pay the difference if the sales tax is higher in the second state.

Most states will require you to pay registration for a boat based in that state, even if you are USCG documented. It's a revenue thing.

Title. Some states will title a boat but the USCG documentation is evidence of a clear title. Call the USCG documentation office for information and details on how to confirm the status of this boat.

[MarkSF]

When I bought my boat I used the services of a marine titling specialist. I think they charged about $300 for the whole process. Particularly important is a title history search.

They made the whole process super easy, and I was able to concentrate on enjoying my new boat!

[j-hood]

Awesome. She has been USCG documented, although the soon-to-be-previous owners' documentation expired just this month -- they didn't want to renew it, and I am in no position to until I technically own the vessel. I will look into that.

I am willing to pay whatever taxes and registration is required, I just wasn't really sure where to start and I didn't want to feel like a criminal leaving Virginia.

[MarkSF]

I don't think anyone has explained this yet :

There are two ways of registering a boat.

1) USCG documentation

2) A state registration

You will have to decide whether you are keeping the boat USCG documented, in which case you'll be transferring it to your name via some USCG forms, or de-documenting it and registering it with the state.

The only strong reason for doing the latter is if you are not a US citizen, as non-us citizens can't document a boat with the USCG.

Taxes are an entirely separate issue - CA has a use tax (one off sales tax) and a property tax (yearly tax paid to the city where the boat is kept)

I strongly suggest researching the state websites yourself on the tax issues.

[letsgetsailing3]

Register it where you're going to keep it (in Maryland). You have 60 or 90 days.

[hellosailor]

Mark, techniclaly he can't "state" register his boat. He's a stateless person living in that great unicorn ranch, Washington D.C. Not a state. Although I'm sure DC has some provision for vehicle registration, it ain't a state.

Similarly, if DC has a use tax that may apply to him, even if the boat doesn't come into DC waters for years down the line. It pays to check with the DC DMV folks and to read the actual laws they cite, not take anyone's word on the phone.

Except, perhaps, the USCG Vessel Documentation Center. Great folks on the phone, and they tend to know their stuff. I'd suggest calling them immediately to find out if the lapsed documentation will create any issues, or if there is a specific grace period that might apply. (And if so, act within the period.)

These days...most states have this stuff on the web, so researching & confirming it can be a PITA but at least you don't have to go out chase down the printed versions to be sure.

[Scott Berg]

As previously noted DC does not tax documented vessels.

Address all inquiries to Linda at the Harbor Patrol
DC DMV doesn't deal with boats.