Negotiating Sales Tax
<HTML><!-- eWebEditPro 18.104.22.168 --><P>Can you tell me how the sales tax works on a yacht purchase in New Jersey? For example, if I pay $200,000 for a boat, will I have to pay the full six percent or is there a maximum set dollar amount? </P><P><BR><STRONG>Jon Shattuck responds:</STRONG> <BR>Thanks for your query. Three factors weigh on tax ramifications: Where you buy the boat, where you live, and where the boat will 'live' after you buy it. When you buy a boat in another state, you generally have a time limit to remove the boat from the state, or you will be required to register the boat in that state, which usually means paying tax there.<BR><BR>Where you live may affect your tax situation, but where the boat will be docked, and therefore registered, is the most important factor. (Essentially, registration equals taxation.)<BR><BR>Each state has different registration/taxation rules and laws, each with its own set of loopholes and idiosyncrasies. For example, the state of Minnesota requires sales tax on used boats unless they are documented. In Wisconsin, you're required to pay a sales tax on used boats unless you purchase a boat in a contiguous state, keep the boat in contiguous waters (Lake Michigan, but not an inland lake), live in that contiguous state, and that state does not charge sales tax on used boats. Illinois does not charge sales tax on used boats purchased between private individuals, or through a broker, but it does charge sales tax on used boats which have been taken in on trade by a dealer.<BR><BR>If you are working with a broker, I'm sure they have a good understanding of what your options and responsibilities are. Otherwise you will need to contact the New Jersey Department of Motor Vehicles (609/292-4630), but let me offer you a few words of caution. When you ask most state DMV or DOT employees if you will owe tax, and how much, their answer is almost always, yes, along with whatever the maximum amount is. And, if you talk to two or three people, you'll probably get two or three different answers.)<BR><BR>The YBAA (Yacht Brokers Association of America) website www.ybaa.org has a listing of State Tax and Registration contact information. Just go to the website and click on Boating Public, and then State/Province Boat Sales Tax and Registration. Here's another link I found for New Jersey: www.state.nj.us/mvs/boats.htm. </P><P>While you want to make sure you don't overpay, don't make the mistake of getting involved in creative taxation. If you get caught bending the tax rules in your favor, you will pay the underpayment, interest, and penalties. I hope this is helpful.<BR><BR></P></HTML>
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