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vksf 10-30-2013 03:44 PM

Boat Purchase and Financing Canada
 
Hello,

Apologies if this is not the right place to post this, but hopefully it is.

I live in California but am in the process of trying to purchase a sailboat in Canada and had a few questions.

I have been told that by sailing into US water and then back to Canada I will not have to worry about Canadian taxes on the purchase.

My understanding is that when I finally bring the boat into the USA I will not have to pay any import tax because of NAFTA is that correct?

I am also aware of the fact that upon bringing the boat back to California next year I will be responsible for paying use tax. One question I had was whether bringing the boat to Washington State this year with a lower sales tax rate would save me money, or whether I will still be responsible for additional use tax (the difference between the two states sales tax) upon entering California.

Finally I was wondering if anyone has any advice on trying to finance a boat being purchased internationally? I am finding that no one will give boat loans for a boat purchased out of country. How is this normally handled ? Do I need to get a loan in Canada itself? Anyone have any experience with this? The broker unfortunately does not do financing.

Appreciate any and all advice.

Thanks so much.

Faster 10-30-2013 10:39 PM

Re: Boat Purchase and Financing Canada
 
If the boat is North American built, no duty will apply under NAFTA.. But plenty of boats were built in Europe and the Far East so pay attention! Boats outside NAFTA coming into Canada are subject to 9.5% duty.

Sorry can't be certain about any of the rest of your questions..

vksf 10-30-2013 10:59 PM

Re: Boat Purchase and Financing Canada
 
Thanks Faster,

This boat is built in Canada so should be good then hopefully.

Minnewaska 10-31-2013 07:07 AM

Re: Boat Purchase and Financing Canada
 
These are good questions for an accountant. You seem to have the concept of use tax, but every single state makes their own rules, which are further complicated by reciprocity they decide between themselves as well. Reciprocity is whether you will get credit for sales/use tax you paid to another state. Further, the rules are usually different for residents and non-residents of the specific state. For example, non-residents can sometimes defer paying sales/use tax if they leave quickly enough. Quickly also being define individually by state. Residents are often subject to these taxes instantly.

Here is a straw man that you should have checked out.

Contract for the boat and pay to have it delivered to the US (presumably Washington State) for closing. This should satisfy the financing company. You will have to document the boat with the USCG (assumes you are US citizen), not just title it in your home state, so that you can return to Canada (not following why returning is important, btw). Leave Washington before their sales/use tax is imposed upon a non-resident. You may have an affidavit that is required to prove you left. When you're ready to bring her to California, pay use tax to CA then. You can research reciprocity between these States, if you're really trying to save a percent or two, but then you'll actually have to stay somewhere long enough to owe it to them. Sounds funny, doesn't it. Most are trying to get out.

This must be one heck of a boat, as there are thousands available for sale in CA. The only final point is that you can rightfully manage these laws, if you are actually doing what you say you are doing. If you say you've left the State or Country, but haven't, or register elsewhere, then bring her to CA to stay off their radar, that's tax evasion. A nasty, sometimes criminal, offense. At the least, the penalties and interest are incredibly harsh and States are in such dire financial condition, they are paying to track rich boat owners down to extract the vig.


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