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post #11 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

Your business transaction has ended. He's asking for a charitable contribution.
It's up to you to decide if you're feeling charitable. Also, If allowable, He'd also get to take the deduction on his federal income tax return.

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4.I sold my personal property (boat, aircraft, machinery, or equipment) after January 1. Shouldn’t the new owner be required to pay the property tax?
Even though you may no longer own the property, you are still liable for the taxes because you owned it on the lien date. When taxable personal property is sold subsequent to the lien date, it is the duty of the seller to pay the taxes on the property for the ensuing fiscal year.

5.Can the assessor prorate assessments or taxes between the seller and buyer of taxable personal property?
No. The assessor must annually assess all property in the county to the person owning it on the lien date. There is no provision in the law that allows the assessor to prorate assessments between the buyer and seller of taxable personal property that is sold in the ensuing fiscal year.

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post #12 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

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Originally Posted by Nias View Post
It is an unexpected expense which I am not prepared for. I also wouldn't and won't ask the new owner of my old boat to reimburse me once I sell it.
It doesn't have to be confrontational. What you said above is an honest answer.

After all you didn't write California's property tax laws.

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post #13 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

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Are the taxes for the previous year or for the coming year?
Taxes apply to the fiscal year running from July 1st through the following June 30th and are payable in advance, by no later than August 31st of the then current fiscal year. Taxes are assessed as of a valuation date of the preceding January 1st and are payable for the impending fiscal year by the owner of record as of that date. Under normal circumstances, a purchase and sale agreement should include provisions for the proration of taxes, slip fees and the like as of the sale date. If the sales agreement did not make any mention of tax prorations, a buyer could reasonably assume that the sale price was net of tax although the omission may have been an error on the part of the party that drafted the sales agreement (if the Seller) or an intentional omission (if, perhaps, the Buyer). If a Broker arranged the sale and erroneously omitted the tax proration, the liability would be a matter between the broker and the Seller.

As a practical matter, the Buyer may need the Seller's assistance with matters concerning the boat during his/her initial ownership considering the Seller's experience. Given that, it would behoove the buyer to make an accommodation although he/she might not have a legal obligation to do so. Sometimes, if not almost always, it pays to do "the right thing" and if the omission of a tax proration provision in the agreement was simply an error, doing the right thing might include paying a portion of the tax if not the entire amount considering that in this case the buyer will have owned the boat for at least 11 of the 12 months of the '13-'14 fiscal year for which the Seller is being taxed.

Information can be found on the subject at Unsecured Personal Property Tax.

FWIW...
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post #14 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

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Originally Posted by Nias View Post
I've never owned real estate so I don't know how it works there.
When it comes to real estate, you sit down at the closing table with the attorney who handles the closing. he has all the documents that everyone has to sign off on and those closing documents show any and all taxes are pro-rated and all that is spelled out when you get your good faith estimates before closing.

As we all agree, you are under no obligation to split the fee and the owner should have included that in the sale agreement, but he didn't. it's his loss.

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post #15 of 65 Old 08-14-2013
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Paying your own taxes is bad enough much less paying someone else's. Especially when you figure out what they're using the taxes to fund. I can almost guarantee you it has absolutely zip zero nada to do with boats. Aircraft I've owned in my state go to education funding. Makes sense to me.
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post #16 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

Real estate taxes are customarily divided at closing, but ONLY if said pro-ration is called for in the contract.

There is no such thing as thinking of something you forgot to negotiate after closing. If I was the seller, I wouldn't have the gumption to even ask you for it.
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post #17 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

I wouldn't split it with him. As has already been pointed out, it wasn't brought up when you purchased the boat, and he likely received the benefit of the prior owner having already paid the tax when he bought the boat.

Frankly, I think he has a lot of nerve to even ask.

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post #18 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

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Originally Posted by Minnewaska View Post
Real estate taxes are customarily divided at closing, but ONLY if said pro-ration is called for in the contract.

There is no such thing as thinking of something you forgot to negotiate after closing. If I was the seller, I wouldn't have the gumption to even ask you for it.
Yes, I don't know much about tax laws in the US but purely as a common sense thing, there is no way I'd pay that.

So I had the boat anti-fouled a month before you bought it so given that I only had a month and you're going to enjoy 18 months of anti-foul benefit, can I send you an invoice? Yeah sure of course you can.

I wouldn't have had the balls to ask for something like that - I bet he didn't call you to discuss? More like a letter in the mail?


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post #19 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

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Originally Posted by Nias View Post
The taxes are for Jan 1st 2013 through Jan 1st 2014. As Bradhamlet said they ususally send the bill around August so he probably just got the bill and isn't too happy about that.
The personal property taxes billed on July 1st, payable without penalty by no later than August 31st, are for the period July 1st, 2013 through June 30th, 2014. From your post, I'm guessing you'll have owned the boat during at least 11 out of 12 months of that period hence the tax liability is, logically, yours not the Sellers although he/she may have mistakenly omitted a tax proration from your sales agreement.

Frankly, Charlotte, I don't give a dam_, but I do know that what goes around tends to come around, sometimes in spades, and considering that the cost to you, will only be a few hundred dollars--and if you can't afford that you certainly have some surprises coming as to the cost of yacht ownership--it might just be worth you paying a little something to build up a few good will chips. Or not.

As I said, Frankly Charlotte, I don't ... but I do know what a fair minded person would do, at least in my neck of the woods (which thankfully, is no longer California although my forbearers would surely be scandalized at the notion).

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Last edited by svHyLyte; 08-14-2013 at 09:17 PM. Reason: Correct spelling error
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post #20 of 65 Old 08-14-2013
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Re: Previous owner wants property tax credit?

Since the taxes cover a period of time in which the buyer owns the boat he should pay a pro-rated amount. That is my opinion.

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