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  #1  
Old 02-19-2010
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Registering a boat

Hello everyone,
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.
I'm getting conflicting info from the broker and the documentation company in 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?
Cheers,
Tanny
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Old 02-19-2010
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First, IMHO, you're better off registering the boat in Canada, especially if you plan on leaving US waters. State registrations aren't generally recognized internationally, as states are not sovereign nations. You can NOT USCG document the boat without being a US citizen. A Canadian registration should be recognized internationally, unless you do a provincial registration, rather than a national one—this is the same problem state registered boats have BTW.

You're probably going to have to pay sales tax on the boat, especially if you're in Texas for more than a month or two.
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Old 02-19-2010
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The correct term of these sales tax is usually "sales and use" tax. If you don't owe the tax duye to the sale, then the state hits you with the same tax for the "use". If Texas is like most other states, they check marinas and boatyards for lists of boats physically present, the check to see the boats have paid the sales/use tax. If not, they'll charge the taxc plus interest and penalties. If you're there for even a few months, you should consider paying it.
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To complete the state title transfer you may be required to pay the sales tax anyway, unless you can document the vessel is going to be exported to another state or out of the country within certain time limits.
So you will at least pay state sales tax.

Keep the boat at a Texas slip, same as any other state, you will need a registration sticker (other requirements for USCG documented). The marina if it has its act together may also require current registration.

Leave US water and the boat and you may be subject to Canadian rules. Re-enter US waters you must report to a port of entry and show that you and your crew have correct documentation to enter, and that the boat has correct documentation.

Last edited by Ulladh; 02-19-2010 at 07:48 AM.
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Old 02-19-2010
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I have to agree with the above posters. You need to register it somewhere and Canada is your best bet. In Texas, you have up to 20 working days after the sale to register the boat and pay taxes in Texas. After that, penalties start building up. If you register it in one of the states and go out of the country, you will have trouble returning.

If you need the name of a good surveyor, I can recommend a really good one.

Allan
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Chances are very good that you will not obtain the title without paying registration fees and sales tax. Lacking any title, you will have a difficult time registering the boat as yours, and find yourself in great difficulty entering port elsewhere, let alone staying in Texas.
Seems to me that you're inviting an awful lot of trouble and extra effort by trying to avoid what amounts to a minor expense (compared to the hole in the water the boat represents) against the total cost of owning the boat.
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Old 02-19-2010
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1) You don't need a Texas title, you need a Canadian title, assuming you are documenting the boat in Canada like SD and others suggest.

2) Allanbc says you have 20 working days after sale completes to leave Texas or else the sales tax is due. Some states do not count time spent on the hard with work being performed, some do. Check with Texas officials, and good luck getting an accurate answer.

3) You could delay the close of the sale until after the work is completed. You'll need a very tight agreement with the seller to protect you both. Someone, presumably you, will be paying for the work done, and you'll want to make sure the seller can't change his mind and not close on the deal. But if you do this, your 20 days won't start until the end of the work period.

Good luck.
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Quote:
Originally Posted by JimHawkins View Post
1) You don't need a Texas title, you need a Canadian title, assuming you are documenting the boat in Canada like SD and others suggest.

2) Allanbc says you have 20 working days after sale completes to leave Texas or else the sales tax is due. Some states do not count time spent on the hard with work being performed, some do. Check with Texas officials, and good luck getting an accurate answer.

3) You could delay the close of the sale until after the work is completed. You'll need a very tight agreement with the seller to protect you both. Someone, presumably you, will be paying for the work done, and you'll want to make sure the seller can't change his mind and not close on the deal. But if you do this, your 20 days won't start until the end of the work period.

Good luck.
Texas is pretty tough to work with. I have had problems on almost every transaction with them.

Here is a link to the boat registration information. TPWD: Boating - Boat Ownership
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Quote:
Originally Posted by Tanny View Post
Hello everyone,
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?
Cheers,
Tanny
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.

Last edited by Architeuthis; 02-19-2010 at 11:54 AM.
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Old 02-19-2010
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If the boat is currently titled to the seller, the ownership transferr is not complete until the title has been transferred to the new owner.
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