# Confused non-resident



## sab30 (Oct 11, 2006)

I cant seem to find an answer to my question. My wife and I currently in Canada plan on purchasing our next boat for cruising within the next year. We would probably purchase in the US most likely CA. The boat will never return to Canada as the west coast sail up doesnt appeal to us. We would probably leave the boat in CA during trip back to Canada to see family (and required every 6 months) Taxes are also lower in CA than in Canada. 


If I purchase a boat in California where the primary use will be can I pay the taxes register it in the state even if Im a non resident?


If we decide to cruise if it is regsistered in CA would there be a requirement on having the boat back in the state or do they care as long as the taxes are paid and the boat is regsitered?


Any link or comments would be appreciated...


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## sailingdog (Mar 19, 2006)

I think it would make more sense to register it in Canada rather than California, *since, if you decide to go to Mexico, you're might have a problem with a CA-state registered boat, and being Canadian. * Just some food for thought.

You probably wouldn't have to pay any import duties on the boat, if it doesn't enter Canadian waters, but would probably have to get an annual cruising permit for your boat.


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## ckgreenman (Aug 22, 2008)

What about registering with the USCG?


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## sailingdog (Mar 19, 2006)

If they're non-residents... they're not US citizens...and USCG documentation requires US citizenship by at least 51% of the ownership.


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## sab30 (Oct 11, 2006)

sailingdog said:


> I think it would make more sense to register it in Canada rather than California, *since, if you decide to go to Mexico, you're might have a problem with a CA-state registered boat, and being Canadian. * Just some food for thought. You probably wouldn't have to pay any import duties on the boat, if it doesn't enter Canadian waters, but would probably have to get an annual cruising permit for your boat.


Thanks..

I was trying to avoid 13% and duties (if not made in the USA-our duty is 9.5% on non US boat.

Revenue Canada states the following:

You do not need to provide customs clearance documents to license a boat that you purchased in the U.S. or outside of Canada, *but you still need to remit duty and taxes on the purchase to the Canada Border Services Agency*

I dont know if that applies to a boat that I am not bringing a boat into Canada, but after my last purchase and import, I think to get a reg number Im almost positive I would have to pay the above noted cost.

It made more sense if the boat was not returning to Canada (ie purchased and occasional kept in CA) to regsiter it there, save money on taxes/possible import fees, and probably purchase it for a lower price.

SD-why could a CA registered boat be a problem in Mexico?


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## marinegirl405 (Jun 7, 2007)

I think you can REGISTER the boat in Canada (takes a few weeks and a few $ too), and if you are not importing the boat you won't have to pay the taxes. You will have to pay your sales taxes somewhere (broker may have a waiver for him if you are not paying the the state you purchased it) - and if CA is a good rate for you - go ahead and do that. Sounds sensible. Also if you are Canadian registered, Cuba will never be a problem 

I paid VA tax but did not register the boat in VA, it was not easy to find the right forms, but an email to the agency that handles it got a quick reply. You can email the CA folks and just check they won't have any issue with excepting your money (How could they say no?).

I know of another boat purchased in the USA by Canadians "Slapdash" their report says_ "In the end we had to resign ourselves to the maddening (and expensive) bureaucracy of our home and native land. The process is so tortuous that we actually had to hire a professional that specializes solely in registering non-Canadian boats."_. But even that did not go smoothly. Along with other frustrations imposed by the Canadian guys - special bills of sale, and notarized sellers signatures. So be prepared for a few headaches, give yourself plenty of time to get the process completed before you plan on leaving the states with the boat. See Slapdash posts of 19th and 26th September 2007

Good luck, and have fun!


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## sailingdog (Mar 19, 2006)

Sab30-

State registrations aren't always recognized in foreign countries, since states aren't sovereign countries and have no standing in international situations. State registered boats can have problems with customs, as many foreign countries aren't familiar with state-registration documentation. In many cases, you have to check in with customs at every port with a state-registered boat, which is not the case with a nationally flagged boat.


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## camaraderie (May 22, 2002)

Actually...Mexico is one of the countries that does NOT require documentation. From Latitude38's Mexico prep advice;

"• *Boat Documents* - Every boat must carry current vessel documentation that proves ownership and port of registry. If your boat is not a U.S. documented vessel, you must carry state registration papers - and ideally a bill of sale and/or other proof of ownership."
Full details here:Baja Ha-Ha Cruisers Rally: Sailing from San Diego to Cabo San Lucas


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## magnusmurphy (Jul 7, 2000)

Register in Canada as a Canadian flagged vessel with Transport Canada but if you don't bring the boat to Canada you never have to pay any duty, nor PST. The GST depends on how you finance the boat. I've done this and have friend who've owned more than one boat this way. ONLY when you bring the boat to CAnada would you need to think of the PST and the import duty if not a NAFTA vessel.

M Murphy


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## Valiente (Jun 16, 2006)

^ ^^ ^ ^^
I believe this is correct. 

I am in Toronto and I wanted to go check out an NY state-registered boat, but as it was French-built, buying it in the States and "importing" it back to Canada would have totalled 24% of the purchase price, making it no bargain at all irrespective of what I thought of the boat (a Jouet 1280, if anyone's wondering).


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## sailingdog (Mar 19, 2006)

Except, with the boat owners being CANADIAN, they may run into some complications with a US-STATE-REGISTERED boat... and having it under Canadian Flag would get rid of any of those issues. I believe the website you've pointed to is written based on a person being a US Citizen, and may not be applicable to the OP's situation.


camaraderie said:


> Actually...Mexico is one of the countries that does NOT require documentation. From Latitude38's Mexico prep advice;
> 
> "• *Boat Documents* - Every boat must carry current vessel documentation that proves ownership and port of registry. If your boat is not a U.S. documented vessel, you must carry state registration papers - and ideally a bill of sale and/or other proof of ownership."
> Full details here:Baja Ha-Ha Cruisers Rally: Sailing from San Diego to Cabo San Lucas


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## sab30 (Oct 11, 2006)

magnusmurphy said:


> Register in Canada as a Canadian flagged vessel with Transport Canada but if you don't bring the boat to Canada you never have to pay any duty, nor PST. The GST depends on how you finance the boat. I've done this and have friend who've owned more than one boat this way. ONLY when you bring the boat to CAnada would you need to think of the PST and the import duty if not a NAFTA vessel.
> 
> M Murphy


Thanks Murph...

That is good info..I will make a couple of calls today. Do you know what happens when it comes time to sell the boat (ie in the state where I bought it) Being that it is now registered in Canada if someone buys it in that state will they have to pay tax on it as an out of state boat.?


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## RandyonR3 (Oct 2, 2005)

Being I live in the state mentioned, California, I'll give you some info on the tax and boating regs. 
The sales tax, depending on area where you bought it, will range between 7.5 and 8.5%. And then if its a new boat, the State asks for a one time assessment of 8.5% property tax with 1% to follow for every year after.
But I'd check the luxuary tax with the broker befor buying..
The 1% tax, yearly, is figured on the first of January every year. The Marinas turn in a report to the state for billing.
When we purchased our boat, we took position in Oregon which has NO sales tax..


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## sab30 (Oct 11, 2006)

*I have an answer*

For future reference for those interested:

I have received an answer after countless phone calls. As the pp indicated as a CDN citizen it cannot reg in the US under US flag. It must be registered in Canada. NOTE this is different than our normal licensing which is free of cost and quite common which also provides you with a vessel identification number. Regsitering is done through Transport Canada involves a fee ($250) and allows you sail under CDN flag. There is no requirement to import to have it regsitered, just sworn affidavit. Here is the kicker...if that boat EVER comes to Canada, Canada Customs WILL consider it an attempt to import the boat (even though it may be temporary) You either have to pay all duties (if applicable) and taxes or turn around and remain outside of CDN waters. There is no exception to this. The boat can never return home with us unless a very large bill is paid  this would be in addition to state taxes already paid in the state it was purchased...ouch

I think there is a previous post but I will ask here in the interest of time..if I purchase in CA do I have to pay CA tax or is there a time frame to physically remove the boat and am I allowed to return, if so is my time limited that I am allowed to remain.

Thanks again all...trying to do all my due diligence and homework which is what Dad taught..


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## sailingdog (Mar 19, 2006)

Most states have a grace period in which you have to remove the boat from the state. It is often 30 or 90 days. However, if you normally will be keeping the boat in Californian waters, you will probably have to pay the sales tax on it... since the government may see any removal from state waters for a short period of time as one done just to avoid paying the sales tax....If they come to that conclusion, they can get pretty nasty about it...



sab30 said:


> For future reference for those interested:
> 
> I have received an answer after countless phone calls. As the pp indicated as a CDN citizen it cannot reg in the US under US flag. It must be registered in Canada. NOTE this is different than our normal licensing which is free of cost and quite common which also provides you with a vessel identification number. Regsitering is done through Transport Canada involves a fee ($250) and allows you sail under CDN flag. There is no requirement to import to have it regsitered, just sworn affidavit. Here is the kicker...if that boat EVER comes to Canada, Canada Customs WILL consider it an attempt to import the boat (even though it may be temporary) You either have to pay all duties (if applicable) and taxes or turn around and remain outside of CDN waters. There is no exception to this. The boat can never return home with us unless a very large bill is paid  this would be in addition to state taxes already paid in the state it was purchased...ouch
> 
> ...


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## J36ZT (May 18, 2008)

Sab30,

As it turns out, I am a California resident. The registration of boats in Calif is through the Department of Motor Vehicles (DMV). I was hoping to find you an e-mail address for them...one that they might respond from...but that is too much to ask from a government agency. I was able to find a phone number or two:

"Technicians are available to assist you during normal business hours if you cannot find the information you seek from our website. The Department of Motor Vehicles call center business hours are Monday, Tuesday, Thursday, Friday 8am to 5pm, Pacific time and Wednesday 9am to 5pm, Pacific time. You may contact us at 1-800-777-0133, if calling outside of the United States you may contact us at 1-916-229-0370. For the hearing impaired the TTY number is 1-800-368-4327."

I have heard of people taking their boats down to Mexico for a period of time to avoid some of the taxes. I don't know all the details however.

Fair winds/following seas,

Skipper, J/36 "Zero Tolerance"


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## sck5 (Aug 20, 2007)

"Being that it is now registered in Canada if someone buys it in that state will they have to pay tax on it as an out of state boat.?"

I live in NY and have looked at some boats across the lake in Canada. The broker confirmed that if I buy from them and sail it home they report it as an export and it is not taxed in Canada. I would pay NY state tax as I live there and would register it there. I am sure the rules on the Canadian side are the same regardless of which province you buy in. California I am sure would be happy to take your tax money just as NY is.


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## sab30 (Oct 11, 2006)

J36ZT said:


> Sab30,
> 
> As it turns out, I am a California resident. The registration of boats in Calif is through the Department of Motor Vehicles (DMV). I was hoping to find you an e-mail address for them...one that they might respond from...but that is too much to ask from a government agency. I was able to find a phone number or two:
> 
> ...


I was at the mercy of the 5 hr busy signal..thanks I will keep trying

sck - Im not sure how that works..in Canada taxes only have to be paid once..if I had proof of taxes paid in that state (eg. CA) that I planned to resell it in, I didnt think the new owner would be required to pay taxes again in that state..I dunno...


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## sailingdog (Mar 19, 2006)

In the USA, sales tax on titled items are collected every time the item is sold. There are some exceptions to this, like if it is transferred between family members, at least in some states.


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## magnusmurphy (Jul 7, 2000)

Here's the way we looked at it:

We're Canadian and proud to sail under the Canadian flag. Why fly a foreign flag???
We bought the boat in the US and paid only GST in Canada, no duty and no PST. Yes we know that when we eventually bring the boat back to Canada, which we likely will do, those will be payable. In the meantime however we get a nice deferment. We did take the boat out of US waters to the Caribbean though and things might be different if you leave it in the US. We bought it in RI and only left six months later and nobody ever said anything about any local taxes.

I was also told that since we're Canadian citizens we cannot US flag the vessel. I have met people who flagged boats in countries they've never lived. To me that makes absolutely no sense though and I can never be proud of a flag that has no personal meaning to me. We fly our Canadian flag on our boat's stern proudly - only matched by our South African flag on the port spreader showing our heritage!

Magnus


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## sab30 (Oct 11, 2006)

magnusmurphy said:


> Here's the way we looked at it:
> 
> We're Canadian and proud to sail under the Canadian flag. Why fly a foreign flag???
> We bought the boat in the US and paid only GST in Canada, no duty and no PST. Yes we know that when we eventually bring the boat back to Canada, which we likely will do, those will be payable. In the meantime however we get a nice deferment. We did take the boat out of US waters to the Caribbean though and things might be different if you leave it in the US. We bought it in RI and only left six months later and nobody ever said anything about any local taxes.
> ...


Magnus,

I couldnt agree more..my post may have been confusing..Transport Canada says I can register the boat in Canada and fly the Canadian flag. I was told (by Canada Customs)) no duties and taxes would be owed unless I physically brought the boat into Canada. So being that we never plan on sailing it to Canada no sense in paying local taxes and fees...I will just pay the state tax where purchased and fly CDN flag as a CDN registered vessel.


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## Omatako (Sep 14, 2003)

I've been avoiding this thread because I'm neither Canadian or American so I sort of left this up to the folks that live there. However, I have bought a boat in California as a foreigner and the process that I used hasn't been mentioned sofar so I will.

When I bought the boat, there was a condition called an Out of State delivery. Here is the paragraph in my offer to purchase:

B. Delivery of the Vessel By Seller to Buyer Outside of the State of California is Mandatory. Buyer's obligation to purchase the Vessel from Seller is conditioned upon Seller's delivery of the Vessel to the Buyer outside of the State of California including its territorial waters, but not more than twelve (12) miles beyond California Territorial Waters, hereinafter referred to as the "Out-of-State Delivery Point." Territorial Waters of California include the waters within three (3) miles of the coastline of California; the waters within three (3) miles of the coast of all islands which are a part of California; and the waters within at least three (3) miles to seaward of a line drawn between the headlands of all bays and harbors along and adjacent to the coast, with the exception of the four areas commonly known as Crescent City Bay, San Luis Obispo Bay, Santa Monica Bay and San Pedro Bay. With respect to these four areas, the Territorial Waters of California extend only three (3) miles to seaward from the low-water mark on the mainland shore. The exact location of the Out-of-State Delivery Point shall be established by the mutual consent of both the Buyer and the Seller.

When the deal was done and the transfer of ownership was to be effected, the seller, the broker and I took the vessel to a point 4 miles off of San Diego and the broker took a host of pictures of the process of the documents being signed with the chart plotter on in the background to prove the location of the boat at time of signature.

In this way, the vessel was deemed to have been sold outside of California and no taxes were payable at all. Nix. And this is not a scam or some sort of under-the-counter process, it is an accepted way of trading boats to foreigners in California.

The vessel was then immediately returned to San Diego as a foreign vessel flying a US courtesy pennant from the spreaders and I went to the Customs and signed in as if I was freshly arriving in the US. Remember this is customs, not immigration so no passport issues.

The next day a customs agent had the vessel deregistered off the US register. There was no new registration required by the US authorities and they never even asked where the boat was destined to be registered. On the voyage home I flew a NZ flag but there was no official registration done that "authorised" me to do that.

I was leaving the US within 2 weeks of this deal being done so I don't know what the longer term issues are surrounding staying in the US but I reckon it would be governed only by my visa conditions. When I left I cleared Customs and Immigration in the same way any other foreign boat would.

And here is the next thing that I need to share and maybe I've just been lucky but if that is true, my luck has been running good for a heck of a long time: I have never been asked by ANY country (and I've sailed to several over the last 15 years) where my boats were registered. The only thing anyone was interested in as far as the vessel itself was concerned was departure docs from the last port and proof of ownership. Nothing else. Ever.

Now I don't want to prescribe to anyone what they should or shouldn't be doing and I won't be entering any debate as to whether any of the above is a good or a bad thing, just to say that this is what we did and it was fine. How it effects returning the boat to Canada I have no idea. Suffice it to say if I had sailed the boat around the Pacific for 24 months, I would have been entitled to return to NZ without any taxes payable.

My boat is now in New Zealand and although I paid the required taxes to keep it here, it is not registered anywhere officially as a NZ vessel. Wherever I ask about official registration, the reply is "Why would you want to?"

FWIW


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## sasfish (Oct 1, 2008)

*re*

USCG documentation requires US citizenship however you could ride out a long cruising permit. You could also think about where you will sell the boat when you're done with her; as you will have to import in order to sell. It cost us $25,000 plus the customs' crap in Australia when we sold two years ago


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## Idiens (Jan 9, 2007)

Omatako said:


> ... And here is the next thing that I need to share and maybe I've just been lucky but if that is true, my luck has been running good for a heck of a long time: I have never been asked by ANY country (and I've sailed to several over the last 15 years) where my boats were registered. The only thing anyone was interested in as far as the vessel itself was concerned was departure docs from the last port and proof of ownership. Nothing else. Ever. ...


Try sailing into UK or Dutch waters these days, their officials ask every time they stop you (plus proof of VAT payment, etc..). I fly a Belgium ensign and in both those countries I get stopped and asked. In Holland, several times a year.


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## emagin (Jun 8, 2007)

Here's a tidbit on California - you now have ONE YEAR to get a boat out of California if you don't plan to stay long term and want to avoid the sales tax.

-------- Original Message -------- 
Subject: [San Francisco Sailing] CA Sales TaxDate: Thu, 02 Oct 2008 00:30:46 -0000From: jam48hass <[email protected]>Reply-To: [email protected]To: [email protected]

FYI:

AB 1452 has been signed, abolishing the California "90-day yacht 
club". THe "waiting time" (to keep your new boat out of CA waters and 
avoid paying sales tax) is now 1 year. Bill apparently says it takes 
effect immediately.


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## sasfish (Oct 1, 2008)

one year I cant believe it. Thats crazy.


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## sailingdog (Mar 19, 2006)

Just to clarify, here is the language from *AB-1452*



> _The people of the State of California do enact as follows:_
> 
> SECTION 1. Section 6248 of the Revenue and Taxation Code is amended to read:
> 6248. (a) On and after the effective date of this section, there shall be a rebuttable presumption that any vehicle, vessel, or aircraft bought outside of this state, and which is brought into California within 12 months from the date of its purchase, was acquired for storage, use, or other consumption in this state and is subject to use tax if any of the following occurs:
> ...



​Basically, under the new law, if you bought a boat, and have it in California for more than six-months, for whatever reason, out of the first 12, you're gonna have to pay sales taxes on it, regardless of where you bought it. The exception is if the boat was bought and then put into repair/refitting... however, you can't use the boat for much more than a calendar day after finishing said refitting/repairing or you'll get nuked with the tax.

However, registering the boat in Canada may give you an out, via section (b).


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## sab30 (Oct 11, 2006)

Thanks guys...


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## lynn1120 (Jan 30, 2008)

*It actually depends on the boat manuf*



Valiente said:


> ^ ^^ ^ ^^
> I believe this is correct.
> 
> I am in Toronto and I wanted to go check out an NY state-registered boat, but as it was French-built, buying it in the States and "importing" it back to Canada would have totalled 24% of the purchase price, making it no bargain at all irrespective of what I thought of the boat (a Jouet 1280, if anyone's wondering).


The non nafta tax may not even come up or be an issue if the manufacturer produces or produced some boats in NA


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