Originally Posted by Tanny
I'm a Canadian trying buy a used boat currently located in Texas.
I have read elsewhere on these forums that Texas sales taxes (6.25%) can be avoided if I were to register my boat as a Canadian vessel. And I wouldn't have to pay any Canadian taxes if the boat is never brought into Canadian waters.
My intention is to sail in the Gulf area for a while and eventually make my way to the Caribbean - so I will never bring the boat into Canada, or back to Texas.
First. I'm told that Transport Canada requires a rigourous survey of the boat that could cost $1600 or more. Further, only some surveyors qualify to do a survey acceptable to TC.
Second, I'm told that Canadian Licensing is not recognized in many countries.
Third, I don't know how long I can keep the boat in a Texas slip - or on the hard having work done on her - before the Texas tax-man shows up with an invoice.
Surely this isn't as difficult as it seems!
Does anyone have experience with this?
Yes it can be difficult, very difficult. It can also be very easy.
One of the biggest problems is getting a government official to tell you what is required and then to get another official to agree to that.
That is the source of the confusion. The systems are being run by the people who administer them and that can vary on any given day.
Here is what I learned by doing.
You can license it in Canada, in your home province. You will likely have to pay provincial tax at that point unless you are in Alberta. You may or may not have to pay federal tax at that point but don't kid yourself it is due at that point.
I think that should be repeated. Even if you do not pay all the taxes due when you license it, or register it, you owe those taxes. Does not matter that you never return to Canada or if you sink or sell the boat those taxes are owed.
Unless of course you are rich or connected in which case there is a process to get them waved.
Where is your boat made? That is important if importing to Canada, duty can be applied and that can be due as well.
Since you do not plan to sail to Canada you do not have to register the boat in Canada. You may not want Canada even knowing you have the boat. The less they know about your assets the less they can tax them.
If I was going to do what you are planning I would not pay tax, or I would pay the least.
When you buy the boat you will not likely have to pay tax, though you may have to agree to leave the State within a time period. Each State that you enter will have similar rules.
Then you make your way to a State where the taxes are low enough for you. I hear SC and some of those east coast states have reasonable boat taxes.
But if you cannot register or license (the US uses different terms) the boat there don't pay the tax.
In Florida, where I bought my boat, they were all about me getting that FL number and of course paying tax. I didn't but it sure seemed clear to me that I could have registered the boat in FL.
Not so in Alabama. I left my boat there beyond the time period and read that I owed tax. So I figured I could pay the tax and register the boat. NO. Only residents of AL can register a boat there. Watch out for crap like that.
Paying tax does not mean you get to register (what we would call license) the boat!
If you cannot get the boat registered in the States then head to the BVI. There is a process there that can be followed to document the boat and fly a really cool flag off the stern.
It also depends on what kind of money and time is involved. What kind of money are we talking about? $10G? $100G, $1000G?
oh I forgot. Don't sweat the difference between license and registration. Sure registration with a nice name is pretty but license is the minimum. You are only sailing in the US and the Carib so there is not going to be a problem solely due to just having a license as long as everything else is in order.
Also with just a license you can pick almost any name and port of call you want, though you might want to leave off the port of call. I put on one and found that questions were asked about it. Having a port of call on your boat suggests it is registered (or documented). To be safe just stick with a name and make it short.
While it is cool to call your boat something like: Mechanical Advantage Taken, think about using it on the radio:
Mike, Echo, Charlie, Hotel, Alpha, November, India, Charlie, Alpha, Lima...well you get the idea. I was glad I had a short name when I had to do that.