SailNet Community banner
  • SailNet is a forum community dedicated to Sailing enthusiasts. Come join the discussion about sailing, modifications, classifieds, troubleshooting, repairs, reviews, maintenance, and more!

Maryland Taxes

5K views 22 replies 10 participants last post by  tempest 
#1 ·
I'm close to pulling the trigger and moving my boat to MD, but paying more tax to MD than I did in my home state just for the privilige of paying twice as much for the slip and probably every other service I need is sticking in my craw.

So all you MD guys, tell me how worth it it is, to help me rationalize making this move. It will save me about 200 miles each trip to the boat so that covers some of the added expense and I won't have personal property tax on the boat but the excise tax amounts to over 5 years PP tax and I might not stay in the area that long.
 
#2 ·
Just amortize it!:D :D :D

Seriously, I agree, no one likes to pay it. But it's one of those price-of-admission taxes where it's best just not to think about it too much.

And saving 200 miles of driving each time I went to the boat would be worth A LOT to me -- almost a no-brainer.

Also, if you ever buy another boat in MD, and you work out a "trade", then you can get credit for the prior amount paid and only have to pay the difference.

Where are you thinking of moving?
 
#3 ·
Just amortize it!:D :D :D

Seriously, I agree, no one likes to pay it. But it's one of those price-of-admission taxes where it's best just not to think about it too much.

And saving 200 miles of driving each time I went to the boat would be worth A LOT to me -- almost a no-brainer.

Also, if you ever buy another boat in MD, and you work out a "trade", then you can get credit for the prior amount paid and only have to pay the difference.

Where are you thinking of moving?
HHS
 
#7 ·
Unless it's changed, MD is a good deal. You pay an initial tax that's higher than other states, but once it's paid, you don't pay an annual property tax. After a few years, you are ahead of the game......at least as compared to NC. We pay a sales tax on new boats (not sure about used), then an annual property tax every year forever.
 
#8 ·
Same in VA. However MD's plan only becomes a decent deal if you are there long enough to amortize the costs. I'm hoping I'll be able to retire early and will leave the area for warmer latitudes. If so, I'll be here long enough to break even. We're close enough that we decided if either of us were to loose our jobs, we'd go ahead and move south to look for new employment.

Its the "trapped" feeling that goes along with the big payment up front that's troubling me, but I'm not about to try dodging it. I guess its mainly just a vestige of my typical guy "fear of commitment".
 
#9 ·
As I understand it, MD will charge the sales tax (or difference between what you paid in another state and the MD rate) if your boat spends more time in MD than any other single state. They might not charge you if you spent 5 months in MD and 7 in VA, for example - might be worth looking into?
 
#14 ·
I'm close to pulling the trigger and moving my boat to MD, but paying more tax to MD than I did in my home state just for the privilige of paying twice as much for the slip and probably every other service I need is sticking in my craw.

So all you MD guys, tell me how worth it it is, to help me rationalize making this move. It will save me about 200 miles each trip to the boat so that covers some of the added expense and I won't have personal property tax on the boat but the excise tax amounts to over 5 years PP tax and I might not stay in the area that long.
Because sailing, boating, etc is such a large part of Maryland industry, you can bet they'll take their pound of flesh. It is tough, but I agree that it's better to pay the one-time tax than pay VA's propterty/luxury tax.

IMO, the biggest value for you is saving you the 200 mile drive. You can't put a price on time spent from your life, and wasting it commuting to your boat is no way to live if you have an option.

One reason I finally took the plunge is because I moved to what's called a "water privileged" community. The neighborhood has a beach club, established in the 60's. I pay a flat $500/year for a deep water slip, electricity and fresh water, all within a 5 minute walk from my house.

I'm not exactly a minimum-wage earner, but I don't know how you guys stomach paying $3k-$5k per year for a boat slip in addition to all the other costs of ownership. You all must be doctors or something.
 
#15 ·
Yes the two biggest factors I put on the rationalization is the value of our recreational time and improved ability to have our local friends on the boat. Lets face it, we all probably know folks we wouldn't mind having on the boat for a day sail, but wouldn't want to spend a whole weekend in cramped quarters with. When your boat is a 4 hour a drive away, those people never get invited. Even the ones you'd like to have for a long weekend are more likely to come if they only have to drive an hour and a half or less.

I'm not a doctor either and don't make a lot in the grand scheme of things, but we are a two income family with no children, so we have more disposable income than most. Fortunately I'm good at disposing of it and a sailboat is only one of our big ticket toys. ;)
 
#16 · (Edited by Moderator)
Another way to look at this, monetarily, is the cost of the 200 mile drive. The IRS rate for milage is $0.50/mile. So every time you drive to the boat it will effectively cost you $100 of gas and wear and tear on your vehicle. Then you can figure out what your hourly rate is at your job and charge yourself that for the time spent. After all is said and done I think you will find it less expensive to pay the MD tax.
 
#17 ·
Maryland Boat Tax

All --

Here are a couple of quick answers to the questions above. I concur with the comments that Maryland is a great place to cruise and the tax implications are quite manageable.

Trade-In Credit -- This is easy if the transaction was in Maryland through a Maryland dealer, but trickier if not. If its a Maryland brokered deal, the fair market value for tax purposes is reduced by the value of the trade in. If its an out of state deal, there is a fair amount of wiggle room, and the desk clerk's may not always be consistent, but... there is a trade in certification for that can be filed that will allow you to claim the value of the trade in against the purchase price. This will be more likely to be accepted if the state in which the transaction occurred has a similar exception, and the deal took place through a licensed dealer/broker.

Virginia Sales Tax credit. Maryland should provide a tax credit for sales or use tax paid to another U.S. jurisdiction (not, unfortunately, personal property tax) irrespective of whether it was paid within the last 3 years. The good and bad of Virginia is that the sales tax is only 2% and it is capped at $2,000, if its a high-end boat, the offset will not mean too much. (FYI - the three years matters on whether the DNR will accept the sales price as the current value for tax purposes -- if the sale occurred outside of three years, they will resort to BUC value, not purchase price).

Maryland 5 Months versus Virginia 7 Months -- such a boat is not "in principal use" in Maryland, so it should not be taxable in Maryland. Five months is long enough to be potentially spotted for an assessment from Maryland, though, so you may need to be able to document use in Virginia for more time than in Maryland, and time spent on the hard may or may not count.

I just put up a 2010 update for Maryland for anyone that is interested in more on boattax.com

Happy Cruising
J. Dirk Schwenk
baylawllc.com
 
#18 ·
Since this is a Maryland Tax thread..

Let me pose this question. If I Am a NJ resident, and have a permanent Slip in NJ.. Let's say I want to spend part of the summer/fall cruising the chesapeake bay. At what point do I become liable for any tax payments to Maryland....such as a use tax.. ..is it 90 days?

Thanks
 
#19 ·
Tax and Cruising in Maryland

Let's assume that this is a theoretical question, since I am just working on what you have told me. Theoretically, if you have a New Jersey slip and a New Jersey residence, you have almost certainly already paid sales or use tax to New Jersey at a rate that is higher than the Maryland rate. On that basis, you can cruise as long as you want and whatever else your obligations may be, you will not have to pay additional tax to Maryland. Technically you would be obligated to register the boat to Maryland or request a federally documented vessel sticker, but these charges are nominal compared to tax.

If, however, for some reason the boat was not tax-paid to another state, in Maryland, you can cruise without worry for 90 days. If the boat were to stay in Maryland for more than 90 days, but still be used for more days in New Jersey than it was in Maryland, then it would not be taxable in Maryland. BUT if Maryland's tax authorities were aware of the boat, they would likely turn the information over to New Jersey's tax authorities to see if it were subject to use tax there. If it were used more than 90 days in Maryland, AND more in Maryland than in any other single jurisdiction (like New Jersey), then it would be taxable in Maryland at 5% of its FMV (or 5% of the purchase price if it was purchased within 3 years). This ignores penalties, interest and other defenses, but that's the basic scenario.

We have an article up on this topic -- How Long Can I Cruise? -- Maryland Boat Tax How Long Can Cruise on the website.

Hope that answers the question.

Happy Sailing.

J. Dirk Schwenk
www.baylawllc.com
Boat Tax Maritime Law
 
#20 ·
Dirk,

Thanks for chiming in with your expertise. We appreciate the clarifications. It's too bad that what should be simple has been rendered so complicated by Maryland. But, that's probably good for your business.:)

Folks, Mr. Schwenk is a well known and respected attorney out of Annapolis, Maryland who specializes in these boat tax issues. If you poke around a bit you can find a few articles that he has published which have been very helpful to boaters on this topic. It's good to have his input.
 
#21 ·
DSchwenk,

Thanks so much for that clarification. All the elements of your 1st paragraph are correct. Nj Slip, Nj Residence, NJ sales taxes paid, nj registration.

If I understand you correctly, I can spend as much time as I want in maryland waters, if I purchase a " vessel documentation sticker" from maryland?

BTW the vessel is documented with the USGC doc center. which is a certificate that I carry, not a sticker.

Thanks in advance.
 
#22 ·
Tempest,

Here in MD, a USCG documented vessel is not required to obtain a state boat registration, and therefore is not required to display a state registration number/placard.

However, we are required to prove that either MD excise tax or some other state's sales tax was paid on the vessel at time of purchase.

The "sticker" for USCG documented vessels is something that Maryland issues so that DNR/Marine Police can confirm you are in compliance. What the sticker tells them is that you are a documented vessel that has paid all required taxes.

If the DNR comes alongside and sees current state registration stickers, they know you are in compliance. Likewise, if they come alongside and see a current "documented vessel" sticker (affixed to your mast base), they likewise know you are in compliance. If you are not displaying either, they may ask to see your documentation.

The sticker for documented vessels has a very nominal annual fee, and can be renewed for a period of two years. The reason it has an expiration date is because otherwise it would be very difficult to enforce the excise tax when the boat is resold.
 
  • Like
Reactions: tempest
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top