Ultimately, it all depends on your cruise schedule. Once you`ve established your first few months to a year of ownership and consulted with a tax advisor, the decision on state registration and sales tax should be much clearer. All told, the $18,000 tax cap was a benefit to boat buyers and sellers. If you`re planning to make a boat purchase for $300,000 or more, Florida is a great place to do it with this generous tax law. Below, we`ll outline Florida`s current sales tax law, as it relates to buying speedboats for private dealers and sellers, and hopefully shed some light on this often confusing topic. Sales taxes and caps vary in each state. Some may be a little more and others a little less, but Florida has a uniform sales tax rate of 6%. Depending on the country in which the boat is delivered, discretionary taxes come into play. So far, the $18,000 tax cap has been a positive change for the state of Florida. There have been a number of benefits for the State of Florida, Florida residents, and the shipping industry.
On the one hand, the state of Florida has seen an increase in tax revenue since the law was passed. This includes tax revenues on boat purchases, but also on boat products and services and even on the tourism industry. To summarize the concepts, you can expect to pay sales tax in full when you purchase your boat from an authorized boat dealer (such as MacGregor Yachts and Evolution). By law, a licensed dealer must charge sales tax on the total purchase price of the vessel (and cannot split or remove items to adjust sales tax). If you decide to buy from a private seller, you can disconnect the engine and/or other accessories from the purchase contract and specify a value that will be taxed exclusively on the hull if you wish. There is also some flexibility in structuring the price between the boat and the engine for additional tax savings. In the end, with the right planning and tax know-how, you can expect VAT savings on the purchase of your boat. We would like to reiterate that paying taxes to the DMV is MANDATORY and is an important responsibility. If you do not feel comfortable doing this task yourself, we recommend hiring an authorized dealer to handle the sale for you, as they will not be able to title or register your boat on your behalf until taxes are paid.
In the future, if you are ready to sell the vessel, you will not be able to transfer ownership to the next buyer until taxes have been paid and the title and registration of the vessel are in your name. Inboard motors on yachts or sport fishing boats are always included in the complete purchase of the vessel and can never be listed separately or on a purchase contract. However, it does raise interesting questions about Florida`s sales tax law and outboard motors, as well as ways our customers can maximize their tax savings. If you decide to purchase a vessel from a dealer, the dealer is required by law to charge VAT on the total purchase price of all tangible personal effects sold to you. The Internal Revenue Service may audit the merchant and hold them liable for VAT if these amounts are not collected from you at the time of sale. VDD, on the other hand, has a more limited scope in what they are allowed to impose. This offers a unique potential for tax savings for those buying from a private seller. Bottom line: When you buy a boat from an authorized dealer, you can expect to pay full sales tax on all items purchased at the time of sale. The idea of the use tax is important to mention. If you shop online and the seller doesn`t charge sales tax, you have to pay sales tax to the state yourself.
This is called a use fee and is sent via a form called DR-15MO (“MO” stands for mail order). You can find this form here on the Florida Department of Revenue (floridarevenue.com/Forms_library/current/dr15mo.pdf) website. This form is useful if you are buying items that do not belong to the vehicle (just as your online purchases are also taxable). Prior to the passage of this law, boat owners who wanted to enjoy Florida waters but wanted to avoid Florida taxes had several legal ways to do so. First, if they weren`t Florida residents, they could take the boat to another state for part of the year and then return it to Florida during the colder months. This has worked great for sport anglers, snowbirds, and other people who tend to hike with the seasons anyway. Currently, Florida has a sales and use tax on boats, which is set at 6% of the purchase price. However, Florida limits the total amount of tax for a vessel to $18,000. This tax cap came into effect on July 1, 2010 and is still in effect today.
If you`re looking for a boat worth $300,000 or more, you can make significant tax savings on your next purchase. These prices range from 0.5% to 1.5%, but are capped at $5,000. If you are considering buying a superyacht, the Florida sales tax cap is $18,000.00. As mentioned earlier, you will have to pay sales tax in the state where your boat is used. If you were to buy a boat in another state, there would be a limit to how long that boat can stay in that state before you have to pay sales tax. Each state has a limit on how long you can stay before requiring payment of state sales tax, and each state has a different requirement. Florida is six months if you file an exemption and pay a purchase fee, but you can`t come back for six months. That is why we are also talking about a use tax and not a state sales tax.
For example, you didn`t buy your boat in New York, but if you stay in New York, you`ll have to pay their sales/use tax, the same amount, minus the state sales tax you paid in another state. Again, paying taxes to the DMV is an extremely important responsibility. If you don`t feel comfortable handling the paperwork and DMV visit, we recommend hiring an authorized dealer to do it for you. I hope this article has helped you clarify your options for tax savings when buying a boat. It is important to note that with all this information, there is a great tax planning opportunity for potential savings. If you are buying a boat with a high-priced outboard motor from a non-dealer, ask the seller to list the engine (with the price listed) separately on the purchase agreement. Since you buy through a private seller, you have some flexibility to split the price between the boat and the engines. This can be to your advantage for additional tax savings. Remember that all assigned values must be reasonable and honest. Prior to this law, buyers of boats over $300,000 began moving their business to other states and countries with lower taxes. After years of intensive lobbying in Florida, the $18,000 tax cap bill finally passed. Today, this law has generated significant tax revenue for the State of Florida.
Experts suspect it has even helped create and protect jobs in Florida`s shipping industry. Other popular boat buying states include: Contact your Denison broker today for a more accurate estimate of your boat`s sales tax. If you`re concerned about the cost of buying a boat, you`ve come to the right place. Taxes are unavoidable costs that must be taken into account when budgeting for the purchase of your boat. Offshore closures are usually done to avoid Florida tax stamps for a boat mortgage. To achieve this, you have to walk three miles of coastline in international waters. Then, sign your loan documents in front of a loan officer. Then we take a picture of today`s newspaper and GPS coordinates.