# boat purchase, taxes, residence -- help for NW sailer?



## TSOJOURNER (Dec 16, 1999)

I am expecting to purchase a sailboat this year. I live off an income (about $20000/year) from SS (46%) and a from an investment (54%). I expect to pay half the boat purchase in cash (set aside for this purpose) and finance the remainder (purchase price ~ $75K).

I''m currently a resident of Washington (has a sales tax, no state income tax). Also in the northwest are Oregon (no sales tax, has a state income tax) and Alaska (no sales tax or state income tax). I have no ties that hold me to any particular place. I do want to live aboard and sail the Sound, San Juans, Gulf Islands and interesting places in the Pacific NW. Possibly venturing south & west in a few years. 

So what are the rules for residency, boat registration, taxes...that sort of stuff. This is not an area i have any experience with and I find most of the information provided by the states a bit confusing and/or incomplete.

Is there someone here who can provide some insight based on experience or a greater capacity to understand all the rules and regulations?

And British Columbia, Canada - with no boarders, laws and regulations - I would probably spend most of my time in BC. What does BC require? How long can I be in their waters?


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## TSOJOURNER (Dec 16, 1999)

wab

You need to come join us in the Pacific-Northwest email group. There are alot of sailors there who can answer your questions completely


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## TSOJOURNER (Dec 16, 1999)

Jim, thanks for the invite. I access the internet at the library 4-6 times a month. The email lists I''ve tried in the past have not worked well for me because my box gets overwelmed between visits.

I may give it a try, but if anyone can answer here that would be great.


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## capttb (Dec 13, 2003)

If you are a US citizen you can document your vessel with the federal Gov. thru the Coast Guard ,http://www.uscg.mil/hq/g-m/vdoc/nvdc.htm many lenders require this as it provides more secure lien. You can also register boat with the state, here in CA it''s document or state. Sales tax savings maybe lost in travel expenses looking for right boat, look at a bunch. I like working on my boat but not as much as sailing it so decide for yourself how much that "bargain" that just needs a little "TLC" is really worth. Sailboat hardware, parts, line whatever are more costly than you ever estimate. Most "hardware" will last a lifetime with minimal care, standing & running rigging need regular replacement. 
I see a lot of people buy boats either knowingly or unknowingly that become ''project'' boats that never succeed in setting to sea and those who do succeed and think they spent too much time & money getting there. Even a fairly new boat in excellent condition can use all the TLC & money you want to give it.
In short, (too late) buy the BEST boat you can find regardless of location (west coast anyway), it''s a buyer''s market (always), no real hurry except within, some "bargains" can quickly eat the savings in hidden repairs. You are not a goverment contractor, you don''t HAVE to go with low bid. It''s more like a wife, you want the best one, not the cheapest.


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## jack_patricia (May 20, 2001)

WAB, you have an interesting chicken-egg dilemma (where you plan to sail will influence where you shop for a boat but where you buy the boat will influence where you use her) but keep in mind you are asking a question about legal residence generally, not just related to boat ownership. Here are some general thumbrules which will apply:

1. It is far easier to become a legal resident of a 2nd state than it is to remove yourself from the tax rolls of the state in which you currently reside. YOU may think buying a boat in Alaska and registering her there and keeping her there - and even moving there - will eliminate you from sales tax liability in WA, but your WA tax collector might not think so. So...rule #1 which I would follow is to change your legal residency before concluding the purchasing of a boat, assuming you purchase out of state and wish to remain out of state. Check with WA and also your preferred alternate state (if there ends up being one) about what they each consider absolute proof of residency. I''d bet the minimum will be driver''s license, voter registration, permanent mailing address and proof of current tax liability (e.g. vehicle registration/tax payment).

2. You can''t really get away with a ''stateless vessel'', which is to say a boat you don''t bother to register anywhere. This is because any taxing authority where you happen to place the boat will potentially decide it is liable for use tax there unless you can prove it has been (and should only be) taxed elsewhere. Given that you''ll be taking out a loan, USCG Documentation may be mandated by your lender. OTOH, if you plan to register the boat in Canada, you may be forced to finance in Canada since a U.S. lender may be reluctant to have the vessel''s loan secured by an out-of-country boat with an out-of-country title.

3. I see this question often on BB''s like Sailnet''s and I think, with respect, it''s the reverse of the right question to be asking. Since purchasing a boat is a big decision, financially & WRT one''s lifestyle, it might seem obvious to plan one''s future residency around the purchase of the boat. The "I can live anywhere" notion has an appealing sense of freedom and leads folks to realize they don''t necessarily need to buy in their home state. But there may be many reasons why you will end up wanting to remain in Washington State...or for that matter, want to relocate to a specific other place. Weather, family, friends, employment opportunities (getting SS doesn''t mean you won''t ever want to work again), state services that align with your particular needs and interests are all potentially more long-term and more significant issues than owning a boat. But...having said all that, if you still think that buying a boat naturally leads to reconsidering where you live, then my sense of your sequential steps would be: 1) where do I want to live and play with my boat, given financial and other considerations? 2) what are the steps to become a resident there? 3) Based on how I''ll be using the boat (lakes? coastal? wet/cold vs. humid/hot? seasonal vs. year round) what kind of boat should I be looking for? 4) Where can I find the type of boat I''ll want that I can affordly get to where I want her to be?

Good luck; hope it all comes together for you.

Jack


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## TSOJOURNER (Dec 16, 1999)

Thanks to those who have offered information and opinion.

Trying to be more complete and accurate (I''m not used to writing and have no skill at typing) -- I am very comfortable with my capacity to choose an appropriate boat for my needs. I have good sailing skills, but need more practical experience managing my own cruising boat. I do not intend to limit myself to boats for sale in any particular state - I am considering boats located along the west coast. I understand the purchase process - selection, offer, survey, seatrial, adjustment, closing - and have preapproval for financing. Sailing will be in the Pacific NW. Maybe, if wanderlust grabs hold, I might head south and west - who can say right now? The boat will be my home. 

My problem is with somehow integrating the rules about taxes, state registration, US documentaion, residency, and just how long a boat can stay in whose waters. 

If making positive and clear moves to redefine my residency (Jack, thanks for the caution on this matter) could save me some money, my lifestyle would certainly benefit (see income situation in first post).


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## obiec (Sep 26, 2001)

LOOK OUT !!!! I live in Oregon, But if I sail my boat into Washington waters for more that 60 days in any one calendar year, the state of Washington will try to charge you a user fee. This is around 8.5 % of the value of your boat. Which would be over 5k for my boat. Now if within the first 60 days you let them know you will be there longer, supposable they can issue you a permit for 6 months. Now this is how you get caught. They will walk the docks and make notes of the boats. Then they go talk to the marina and ask how long you have had your slip. Boom yours busted. But is you are living aboard and anchor mostly, and do not stay in a marina for more that 60 days, they would have a real hard time proving where you were.
Also If you are looking for a new boat call me. I am considering down sizing. Right now I am sailing a 38 foot Ingrid. She is very comfortable. But way to much boat for the Columbia river. You will see these any were from 45K to 130K depending on condition and finish. I am just finishing a major re fit. All new engine, electronics , sails and more. I would sell for around 64K. I think you would see that is a real good price for the boats condition. Obie 541-564-7944.


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## dillport (Oct 8, 2000)

My take on the initial question in this thread is that you may or may not be contemplating a change of residence, but definitely are looking for a state where you may buy and or register a boat with minimal tax consequences.

My understanding is that some states (perhaps most) require registration, whether or not you are CG documented. I do know that at least a few states do not require registration IF you are CG documented. So, if you document your new boat and base it in one of those states, it would seem to me that you ought to be able to avoid state registration. 

If you can skip state registration, the next question is whether you still owe that state sales tax on the purchase. If you buy a boat and immediately remove it to a state with no sales tax or individual registration requirement, I think you''d be okay. In comparison to state registration fees (and especially sales taxes), CG documentation fees are quite reasonable.

The hitch is that if you later move your boat to another state which requires registration, you may have issues. Even if your boat is registered or documented in another state, in many states, if you base the boat there for more than a specified time (the ones I know about consider 60 days evidence of intent to reside), you are required to register your boat in that state. Indiana requires such registration, even if you are CG documented. 

Although more expensive than CG documentation, typically, state registration is not too expensive. But if you come to Indiana with a boat which somehow escaped sales tax, upon registration, Indiana MAY demand the "use" tax, if you cannot demonstrate that you paid sales tax when you bought the boat, even if the purchase was years previous to the move. I do know that in the past, they have charged such tax for airplanes brought into Indiana. For example, in one case a plane was purchased in an east coast state by a resident of that state. The particular state required neither sales tax nor registration, having established the position that the FAA regs pre-empted the field and state taxing and regulation would improperly intrude into federal power. At the time of purchase, the buyer had no intention of ever becoming a Hoosier. His purchase was in all ways fully lawful, his only registration requirement being with the FAA. Things change, however, and the buyer moved into Indiana years later and brought his aircraft with him. Indiana picked up on the existence of the aircraft, noted no record of sales tax having been collected, and sued the owner to enjoin the use of the craft until they collected "use" tax. (Incidentally, when a certain low-level tax official was confronted with the question as to whether a fellow may move into Indiana with his car or boat without having to go back decades to prove sales tax paid, this aircraft-moving individual was told that the "policy" is to not enforce this against cars and boats. I don''t get too much comfort from such a statement, though.)

Personally, I see this as an abuse of the law. In any given state the sales tax is legally charged against a resident for purchases made in his state (if the point of purchase was within his state). If he buys something from out of state with the intention it is to be delivered into his home state, then the "use" tax attaches. They call it a "use" tax in this case, because the state has no legal involvement in the sale/purchase--it is made via interstate commerce, and the state may not regulate or burden such purchase. So, when the item is purchased from another state with the intention to bring it into the state, it is hit not with a sales tax, but a use tax (although the distinction isn''t always noted).

But if an Indiana resident buys a boat in Alaska with the intention of leaving the boat in Alaska, and he leaves that boat in Alaska, he ought to owe neither Indiana sales tax, nor Indiana Use tax, as the boat is never within Indiana''s jurisdiction. IF he moves the boat to Indiana a decade later, Indiana ought to have entitlement to neither sales nor use tax at that time, as Indiana had nothing to do with the prior purchase or use. Annual Indiana registration is required subsequent to the move, yes. But sales tax or use tax, no. 

Getting bureaucracies to understand these distinctions is difficult, however, and the injustice is aggravated because the burden of decyphering the mess when assessed typically is not cost-effective for the buyer, as he will be attempting to reason with a multi-headed, disconnected, slow-thinking mule, which will fight his position with obstinence, or with confused, unfocused, biased legalese, all with money extracted from him and his neighbors. Most folks roll over and, thus, the tax policy becomes entrenched. 

In a nutshell, though, I''d think you legitimately may buy a boat without sales tax, if it is to be registered/based in a state which does not impose a sales tax--no matter where you otherwise reside. If it does not require registration if documented, that''s another plus. I would caution that you may have issues later, though, if you move the boat into another less open-minded state for longer than that latter state will allow without registration.

If your boat is based in a state without sales tax and/or registration, I don''t think your own personal residence comes into play. For example, I might be a Hoosier, yet legally own a boat legitimately based in Alaska, without paying Indiana sales or use tax. If a decade from now I were to sail into Indiana waters for more than sixty days, I believe I would be exempt from sales tax and use tax, yet I''d have to register the boat in Indiana. I''d be quite nervous, though, as it can be real difficult to reason with over-reaching tax collectors, even when you are in the right. 

I think it would be interesting if we were to take a poll. How about a listing of the states which have (1) no sales tax; (2) sales tax imposed--with rate; (3) no registration requirement if CG documented; and (4) state registration required, even if documented? It would be nice to have such a database, with actual experiences listed.

I''ll start (question marks indicate what I have been told, but have no personal knowledge--please affirm if you know):

1. No sales tax:
Alaska?

2. Sales tax imposed:
Indiana--6%
Michigan--6%

3. No registration if CG Documented: 
Alaska?
Wisconsin?

4. Registration required even if CG documented:
Indiana
Michigan


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## sailingfool (Apr 17, 2000)

I believe many states call the tax a "use" tax not a "sales" tax although it usually is applied at the time of sale.
If you use a boat in a state with a use tax, expect to pay the use tax, sooner or later. 

(The following is re my personal MA experience)

Tax officials are wise to attempts to duck their use taxes and enlist harbormasters, marine patrol officers, and town personnel in organized search for tax dodgers. Don''t expect to not get caught.
When you get caught, you will be subject to interest and penalties on the max tax that could have been due. If you manage to duck a use tax for 3-4 years, expect to pay twice the original tax when caught. You would need to be able to conclusively prove the use tax could not be due to avoid it, the onus of proof is on you.
If you want to enjoy a boat in a state with a use tax, pay the tax and enjoy your boat in peace...otherise, at least in MA, they will get you and you will pay big.


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## obiec (Sep 26, 2001)

puck em all. It is our country. I have paid my tax. We have an income tax, instead of the sales tax. WA can kiss my ruder.


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## dillport (Oct 8, 2000)

I still say the state is entitled to sales tax on purchases made in that state. It is entitled to use tax on purchases made out of state with the intention of bringing that purchase into the state. It is not entitled to tax on a vehicle, boat, or aircraft which was purchased in a state which does not charge sales tax, if it was intended for use in that state, used in that state, and based in that state. 

If I buy a boat in Oregon and keep it there for ten years, satisfying Oregon''s requirements for my ownership there, then move it to Illinois, why should Illinois profit because Oregon chose to tax me in other ways? If bought the boat in Michigan, paid sales tax, then ten years later take it to Illinois, the cost to Illinois of my subsequent use is no greater than the cost of my use of the Oregon boat--yet many states choose to tax if I cannot prove I paid sales tax initially. This is simply wrong--a misinterpretation of the law by collectors.

Incidentally, I understand that Indiana has been re-thinking its policy of charging use tax on aircraft brought into Indiana years after the original lawful, yet sales-tax-exempt original purchase--only because it has been challenged. 

I condemn taxing of boats lawfully exempt from sales/use tax by reason of their state of purchase/use/base--I am not suggesting that one ought to escape the tax if he buys and uses the boat in state which did charge sales tax at the time. But those states which do not have sales tax finance their operations in other ways, by other means (taxes). A fellow who lives up to the Oregon requirements then has to "catch up" on sales tax when moving into another state gets hit twice. This is punitive--discouraging moves, impinging interstate commerce, and defeatable if properly challenged.

Being responsible and paying one''s share is important--but the arm twisting by non-thinking bureaucrats really pisses me off.

A class action ought to be filed for all those folks who really were exempt, but were induced to pay such windfalls to their new states. Then, I ''d wager, the authorities would figure out what is correct and what is simply overreaching.

Sorry for the ranting.

LD


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## jack_patricia (May 20, 2001)

There sure seems to be a wide collection of views on this topic but a limited amount of factual data.

Boats that are documented will not require state registration...but they will be subject to a separate sticker-registration process that is implemented by states to track boats for tax purposes. State taxation determination is made independent of which registration process is used.

States typically (not always) establish a ''temporary'' period during which visiting boats may use their waters without being liable for either of the registration processes. After that, they want the boat to go thru one of these so a taxation determination can be made.

Typically - again, I don''t think this is universal but nearly so - if a boat is purchased in State A and sales tax is assessed and paid, the boat will subsequently not be assessed use tax in State B (e.g. when it is permanently relocated there) EXCEPT that some amount of use tax will be assessed that is equal to the difference between the lower amount assessed and paid in A than is required in B. So e.g. if you purchase, register and paz sales tax in NC and the amount due is $1000, then subsequently move the boat to FL (for which a use tax of $2500 is due) you could then be found liable for the balance of $1500. (The $$ amounts are just to illustrate the point...)

Some new owners contemplate a ''stateless'' vessel because they reason that they won''t be permanently located in any one jurisdiction and therefore can escape all tax liability. Instead, what they do is place themselves in a position of liability to the first taxing authority that finds them.

Hopefully this helps a bit...

Jack


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## Magic_Moments (May 15, 2003)

I bought my last two boats in Washington and have a small amount of information.

If you buy the boat out of state and bring it in they will try to charge you sales tax if it is within 90 days of the closing.

Sales tax is determined by which county the boat will be residing in. I bought my first boat in King County and lived there so I didnt know this, but my second boat was in Skagit County (Anacortes) while I lived in Snohomish Co. At the time the sales tax was 7.9 in Skagit, but 8.2 in Snohomish, so it made a difference.
I am not sure about marinas on the Kitsap side, but for 35 to 40 foot slips between Seattle and Bellingham, there is a two to ten year waiting list to get in. Some marinas (Port of Everett) will allow you to stay in the slip the boat is in when you purchase it, but some (Cap Sante) make you leave after two months and give the slip to the next on the list.

There are also liveaboard waiting lists at most marinas except I think Port Orchard (Bremerton). One of my friends just got caught living on his boat while he is in school and he is lucky the boat was not evicted, but they are now keeping track of him. If you are planing to mostly anchor you can avoid most of that issue, but state parks limits stays on their moorings too 3 days. I just learned that none of the moorings in Sucia State park have been checked since 1999 and they are starting to have problems, so anchoring is better and free.
Some places had allowed liveaboards to be anchored out on their own moorings like Eagle Harbor (Winslow) on Bainbridge island, and False Creek in Vancouver BC, but I heard on the news today that they are clearing all the anchored boats out of False Creek prior to the Dragon Boat races, so some people will have to call the RCMP to find their boats new location.

Right now the U.S. charges a $30 fee annually for boats over 30 feet to enter the US. You can clear customs by telephone most of the time without going to a customs dock. However skip this procedure once and you will be searched each and every time that you cross the border on both sides. The Canadian officials tend to be very friendly while the US tend to be somewhat less so.

I might do some research on what it takes to get residency in Alaska since they also get the oil bonus which can be $1000 per year, but otherwise I would stick with Washington.

I know Olympia expanded its marina and Everett is expanding in the next 15 years and Bellingham is adding a new 600 slip marina in 15 years. I have my boat in Blaine which added 400 slips in 2000 and has some very consistantly good winds in Boundary Bay/Strait of Georgia, and the San Juans and Gulf Islands are 15 miles away.

I don''t what kind of marina availability BC has, but I do know that Blaine fills up with Canadian boats in April/May til the Law chases them all out in the fall. I think they are allowed up to 6 months in the US. I don''t know how long US boats can stay in BC. I believe the taxes are higher there than in Washington.

Ken


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## sailaway21 (Sep 4, 2006)

Lou Dobbs is on a different channel.


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## Geronimo33 (Jan 15, 2007)

It is my understanding North Carolina law requires the Harbormaster to conduct an inventory of boats present on 1 January each year and report the results to the State. Thus it would seem if one was not at the dock on New Years Day....one would not appear on the inventory.

I cannot speak of the other Taxes but assume North Carolina's love of taxes then there exists a risk of one's purse being lightened in numerous ways.


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## camaraderie (May 22, 2002)

Geronimo...this is a 2 year old thread....but you're right... NC will get you on personal propery tax, checks marina records and contracts and assuming your boat is registered...someone will tax you unless you can PROVE you keep the boat elsewhere.


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