How does US boat tax work?

[CarlF]

Since you are going to do the loop and will eventually pass through Rhode Island, I would state register and title the boat in Rhode Island. They have no sales tax on boats although you will pay a $200 or so a year for the registration.

You don't need to be a resident or have a RI address to register a boat there. I have done this. While not required, I found it convenient to get a mail address in Newport Rhode Island through 1Postal.com. This give you a US mailing address for any sort of mail. When the mail arrives the app shows you an image of the envelope. You can have it forwarded to your current location for $1 (e.g. postage) or have it thrown away if it's junk mail. I think it costs $12/month.

When you buy the boat in Florida you will fill out a form that says you will remove the boat from Florida within 90 days to avoid paying Florida sales tax. To keep them happy, after you are out of Florida it doesn't hurt to mail them a copy of a marina or fuel receipt. You'll also mail a registration and title application to Rhode Island (one RI "quirk" is that you have to have the bill of sale notarized by a Rhode Island notary as well as the dinghy outboard registration. You can also do this online and then mail that in). The application asks for a mooring location. Just put in Newport. When you eventually get to Rhode Island on the loop save a marina receipt or fuel bill from Newport to prove you were there. Although no one is likely to ever ask.

For the first year, you should not stay in any state except Rhode Island for more than 90 days to avoid a sales tax claim. But except for Florida and California which are aggressive on boat sales tax, this is very unlikely unless you are also a resident of that state and are filing tax returns with them for other reasons so they already have your name and address. After the first year some states will instead try to charge you use tax if you stay too long in the state or sometimes a boat excise tax. These taxes are all over the place. My Florida registered boat happens to be in my home state of Massachusetts on July 1 each year (I'm in the Bahamas in the winter). Massachusetts counts July 1 as the day to charge boat excise tax so I pay $100/year to Massachusetts for this. But they don't bother me about anything else and most likely wouldn't even bother me about this if I wasn't filing Massachusetts taxes as a resident.

Be sure to also state register your dinghy and put registration numbers on the bow or water cops are likely to stop you at some point. Do this in Rhode Island too to not have sales tax. Since the main boat will also be state registered you will have to display registration numbers on its bow too.

I would recommend getting insurance with State Farm. The US boat insurance market is a mess because of the hurricane claims from Florida. State Farm will cover you for all the US plus the Bahamas even in hurricane season for a very good price. They also don't require you to file your cruising plans or even a hurricane plan as part of the insurance. These plans are "gotchas" from most insurance companies to get out of paying claims if they can show you didn't follow the plan exactly. I've recently switched.

[MicHughV]

There have been countless people on this forum asking questions about avoiding sales tax on a boat, but any way you cut it, you will need to pay it.
It's a bitter pill to swallow for anybody, so just be a good boy and ante up.
Don't think of it as a "tax" but just what the "price" of the boat is in actual fact.

[wholybee]

Originally Posted by MicHughV

There have been countless people on this forum asking questions about avoiding sales tax on a boat, but any way you cut it, you will need to pay it.
It's a bitter pill to swallow for anybody, so just be a good boy and ante up.
Don't think of it as a "tax" but just what the "price" of the boat is in actual fact.

I agree. For a boat up to about 100k, taxes are usually less than $1000. Rather than trying to avoid that, or trying to minimize it, consider where you will be most often or the longest. Where will you like to get your mail. Pay the tax in that location, and keep receipts for having paid tax there, records of moorage there, and proof of receiving mail there, to justify not paying taxes anywhere else.

[CarlF]

Oops. I mistyped the mail service above. it's Ipostal1.com

https://ipostal1.com