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Hey,
I live in HI and planning to buy a boat in CA in June.
Only issue, I don think I can't get the boat ready to leave right away.
in HI, there is no sale taxes on used boat. In CA, it is certainly close to 10%.
Anyway I can register my boat in HI, keep the boat until next Summer (full year) in CA and sail it - when ready - at that point ?
Use tax IS sales tax. You don't pay both. It's called sales tax on some items, like TVs, and use tax on items like boats. It's a matter of nomenclature, that's all.
I guess the easiest would be to buy the boat officially in HI.
I just need to find a way to cover 2 months of preparation in CA.
I work mostly remote from HI for a company in LA. The only practical way for me to prepare the boat and the trip is to berth in Marina Del Rey.
Maybe if I offer to the owner a security equivalent to the value of the boat ?
Any other ideas ?
in California you can either register with the DVM or document the boat. If you register it then the DMV will collect the use tax at that time. If documented then the state sends you a bill for the use tax about 6 months after the sale for any boat documented with a California address
I was sent a Use tax bill for having a CA hailing port on my boat. Just had to send proof the boat was located outside of CA. Haven't heard anything since.
Property tax is due yearly and is about 1%. Sales / use tax is a one off tax due on purchases, and is about 9%, regardless of whether the item is purchased out of state, or in CA.
Why not do some research on the CA tax websites where you might get some ACCURATE info?
EXACTLY! For instance, I only pay 8% sales tax where I live.
Use tax is usually stated and paid on your tax return BTW and is only for out of state purchases. Sales tax on a boat or vehicle, if done privately, is paid based on what YOU state the purchase price is, FWIW. (hint, hint)
What's to stop you from buying the boat in CA, taking the bill of sale back to HI and just transferring title there? Get your new HI numbers, sticker and slap them on next time you're in CA. Sail it home when you can.
Actually there are three taxes paid on California boats, but normally you only have to worry about two of them, the sales tax and the annual property tax. Sales tax is due on the purchase, you can avoid it by taking an off shore purchase. The boat has to go out of the State for at least one year. There is an exception for repairs, and the boat is allowed to stop in the State for making repairs. But the use of the boat is limited while under repair to 25 hours on the engine.
The second tax is property tax, and that is assessed on the boat if the boat is moored or docked in California on January 1st. The State actually hires people to walk docks to check on boats.
Best bet, take an off shore delivery and head for Ensenada. They do great work there and you don't have to deal with the State.
Lot's of confusion above. Sales tax is paid upon sale and sometimes collected when you register. Use tax is the equivalent concept, but due upon "using" your property within the State. The concept is born from those that buy their property in another state and immediately remove it, thereby being exempt from sales tax in the state of purchase. The State you use your property withing still wants their vig.
Looks up California Sale/Use tax rules. Some states will provide a longer exemption for moving your property to your home state, if you keep the boat on the hard. I do not know CA rules.
However, forget about trying to beat the system by lying or deceiving. If you get caught (and the tax guys LOVE to catch rich boat owners), the penalties and interest will make you bleed. Do it correctly.
I should add that this only works for small $$$ amount boat sales and the like
if your buying a 100k boat and saying its costing only 5k your soon to be in trouble...well sort of jajaja
salvage vessels and abandoned vessels usually dont apply and sold as is, per bill of sale will clear confusion
but I agree dont go boldly lying
in the ops case Im not really understanding the big problem really, its really easy to buy a boat in ca, go to dmv and pay your small fee...pink slip a few weeks later and your good to travel...
if you sail over to hawaii check what hawaii dmv does with out of state boats and what it costs to transfer title over
Again, I don't know CA, but here you are required to provide an affidavit from the seller that you truly purchased below market. Therefore, the seller is also subject to fraud and highly unlikely to agree to pretend they weren't paid more.
I think more important than taxes do you have someplace to put it when you get to HI? I have heard nothing but headaches of people trying to find a slip. I have family on Maui, and would LOVE to move there and liveabord. But it sounds like a very unfriendly boating environment.
In California you will pay use tax on boat unless it is sold by a dealer that has a sellers permit and then he collects sales tax. The DMV will charge you the use tax and it does not matter where you use the boat. the dmv does not have a sellers permit so they can not charge you sales tax, they collect the use tax for the BOE. buy the boat and document it with the HI address. stay away from the DMV. if CA wants there tax they will send you the bill and the first bill will not have any penalties if you pay it on time FAQ - Use Tax on Purchases of Vehicles, Vessels, Aircraft - Board of Equalization
Overboard..... Great link. It clearly says that Use Tax is also due on documented vessels.
.........purchasers of aircraft or documented vessels from any person other than a person required to hold a seller's permit by reason of the number, scope, and character of the person's sales of documented vessels or of aircraft, as the case may be and not otherwise specifically exempt shall report and pay tax to the board.
However, you are exempt under this circumstance......
However, a purchaser is not required to pay California use tax if the only use of the vehicle purchased from a private party in California is to remove it from the state and it will be used solely thereafter outside this state.
The nuance is what they define as use. I would assume taking her for a sail is use. I still wonder if keeping her on the hard until removed from the state is considered use.
The CA personnel responsible for collecting use taxes are a lot more expert at tax evasion than any SN posters. So to the OP, if you buy the boat in CA pay the 8% use tax immediately and enjoy your new purchase, or buy the boat in HI.
Even if you fudge a bill of sale, attempts to hide the value can run aground on the USCG Bill of Sale, your insurance policy's declared value, plus if any financing is involved. For example, I believe the USCG B/S is a public document and you will need to provide a copy of your insurance binder to any CA yard or marina you enter.
Failure to pay promptly (based on the purchase date) will result in assessment of penalties and interest, which start accumulating on the use tax due date, not when CA discovers your debt.
A personal experience - back in the mid-90s while a MN resident I paid off a four year old MA demand for a use tax for a boat I hadn't owned for six years, one purchased in ME while I was a MA resident. MA discovered my name in a audit of the builder. MA had no evidence I ever brought the boat to MA, their attitude was I had to prove that I had not... Eventually I used my out-of-state remoteness to get the state to waive the penalty and interest in return for the tax. Otherwise it was getting dicey even to return to MA for vacation...
I would most definitely not suggest evading a tax that is due. However, I believe the original poster's question was about buying a boat in CA, as a resident of HI, and not having CA sales/use tax become due. There may be some circumstances in which this is the case, but I'd strongly suggest getting the info from the horses's mouth so to speak, ie the tax franchises of HI and CA.
This is an interesting paragraph from Minnewaska's link :
"For a purchaser to qualify for the exemption from use tax, title (ownership) and possession of the vehicle or vessel must transfer to the purchaser outside of California. When a purchaser exercises control over the vehicle or vessel in California prior to the planned out-of-state delivery, ownership transfers to the purchaser in California. Therefore, if any person other than the seller, or an agent acting on behalf of the seller, delivers the vehicle or vessel from California to the purchaser at an out-of-state location, ownership transfers to the purchaser in California, and California use tax applies. For example, if a purchaser asks a friend or hires a common carrier to deliver the pr operty from California to him or herself at an out-of-state location, use tax applies."
Having purchased several boats and aircraft in other states, I can say that is a very strict application of the out of state exemption. In most cases, you simply need to remove the property from the state. The only stress I've ever had is that some State's make a deadline very clear, while others use vague language like "immediately" remove and you don't really know if you complied.
It would seem that CA intends to aggressively collect their use tax. Buyer beware.
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