US yacht not for sale to US customers in US waters.

Tucker, would such a vessel have an obligation to prove that sales tax was paid on it? If a vessel is built in the U.S., but delivered new outside of the country and foreign flagged could it be returned years later as U.S. built returned goods with only the payment of a small fee?

Sales tax is a state issue and is treated differently by different states. We call it sales tax but most state laws refer to it as sales AND USE tax. New Hampsire and Rhode Island have no sales tax, other states have low taxes and high annual property taxes, Florida now has a $18,000 maximum tax, it varies fron state to state.
Florida does not require proof that you paid tax on the boat in some other jurisdiction when you bring it to Florida, as long as you have owned the yacht for more than 6 months, the owner had no intent to use the boat in Florida at or before the time of purchase (hard to claim for a Florida resident), and that the vessele was in a taxing jurisdiction of some US state or territory for at least six months.
I am not a tax attorny or CPA and would suggest confirmation from the Florida Department of Revenue, boat division. I have a contact number and person to talk to who is "boat industry friendly" send a PM for that contact info.

All vessels, not built in the US must have import duty (1 1/2%) paid to the US government to be offered for sale to US residents in US waters. This is paid once, and transfers to subsequent buyers, unless the vessel is sold to a buyer who registers outside of the US at any point. Then the duty becomes payable again. Us Built vessels are not subject to this duty, again, unless they are registered outside of the US.
If a US resident purchases a boat that has not had the import duty paid -only an offshore purchase is legal, He must then pay the import duty if he wishes to register the boat in the US. Or he can register the boat outside of the US and must enter US waters under a cruising permit.
A US flagged vessel can remain outside of US waters, and not be responsible for the import duty. However, any vessel owned by a US citizen, and US flagged , must pay the import duty upon entering US waters.
This is the same principle as if a US citizen went to a foreign country, bought and expensive Rolex watch, and then brought the watch into the US - Import duty is due immediately on the watch upon entry.

Hi,

All very well in theory but, in reality how many folks who buy expensive items of jewellery and watches like that actually declare them on return to their home bases?

The percentage would probably be very small indeed.

It is just a natural human trait to try and stiff the authoritarian figures whenever possible.

1.5% is nothing compared to the 9.5% sales tax here in Washington. I need to talk with a tax expert, but what would preclude someone from listing their homeport in an area with lower sales tax rate? When I registered my autos, all I had to prove was proof of ownership in my previous home state for over a year.

Heck, could one homeport a boat in Oregon for a year, actually keep it their and registered for a year. No sales tax..

If you live in Oregon, go for it. If you live elsewhere and don't fear the wrath of the IRS or your state's tax man or the words "filing a false document" go for it. In all tax matters it's a very good idea to consult a good tax man. There are stratergies that work and others that throw up big red flags.

Question

Can anyone in a an outline format tell me the advantages to selling your US made documented vessel with DHS to a corporation one establishes in the BVI?

Advantages, disadvantages, and other paperwork "navigational shoals" concerns and recommendations?

Hi,

I am assuming that DHS is Department of Homeland Security.

What do they have to do with vessel registration?

I am also assuming you are looking at changing the "ownership" on paper but not in reality.

Will you be traceable as the beneficial owner of the afore mentioned BVI Company?

Will you want to keep your vessel in the US and continue to use it as you do right now?

Learning

Not sure.... just wondering about it for a technical standpoint. All USCC docs are now under the auspices of DHS. Just an intellectual inquiry basically.

Hi,

If she is US Built, documented, tax paid and you spend all or close to all your time in the US I would say save yourself the hassle and keep doing what ya doing.

A YF Member to give you a good rundown on it is Ken Bracewell as his yacht was Cayman and is now moving or moved to US if I recall correctly.

I understand he is away from the US for a wee while so he might not answer a PM quickly.

Thank You!

Yes.. would like to hear from him

There appear to then be two separate issues on this subject if I'm correct? First is compliance with licensing requirements. This applies to those exceeding 200 tons is what I'm reading and I would suspect the biggest issues would be if there was a Captain only licensed as a 200 Master now needing to be 500.

However, the one that seems to be the motivating factor on most is taxes. While I'm as opposed to paying unnecessary taxes as anyone, I'm also not one who is going to go to many lengths to avoid. I know many in Florida who every time their business gets or renews a loan to avoid the documentation fees they make a quick flight or even a one day boat trip to Nassau to sign the papers. It can be sizable and a one time thing.

Location also makes it easy for many to flag their vessels in BVI or Caymen or the Bahamas. To me if you're using it for charters in those areas that makes a lot of sense. However, if the only reason you're doing that is tax avoidance, you ultimately end up going through a lot for your savings.

The fact is I live in the U.S., I live in Florida, I live in Fort Lauderdale. My boats are parked at my dock at home or, when, I'm away in slips I own elsewhere. Now what are the amounts of the taxes we're referring too. The first one I saw was the 1 1/2% duty. So using a $10 Million boat that would be $150,000 on a one time basis. Second was Florida sales tax which someone in this thread said the maximum is $18,000. Now we're at $168,000 if those numbers are correct. The bigger number is property tax. This is where it gets expensive and becomes the factor that pushes so many to foreign flagging. It is my understanding that Florida has no personal property tax on recreational boats. Now I'm not sure of all the details and imagine if you're chartering it then it is no longer recreational and taxes do apply. I don't intend to charter mine. So the $168,000 wouldn't stop me if I'd already spent $10 million. Were the boat taxed like my home though, then I would have given it more thought. I pay $300,000 a year on personal property taxes to live here. On the other hand I save with no personal income tax.

One other consideration is the cost of Florida registration and boat documentation. However, most of the other locales also have fees such as those.

i am considering the purchase of two U.S. built vessels that are foreign flagged. The vessels were chartered in the Bahamas and Costa Rica and the duty fee was paid in those countries. I have seen two vessels and as you can imaging they have been heavily used but they are priced accordingly(Under $500k). I am not too concerned about the hours if the vessel was well maintained. i am looking for other members experience as to the positives or negatives to leaving the boat as foreign or applying for U.S. documentation. I would also like to know if there are any major fees i should be aware of. Although I plan on cruising to the Bahamas I live in South Florida and plan to keep the vessel here. The vessel will be used as a live-aboard and for recreation.

Florida has a favorable tax situation, and you intend to home port it there. Enforcement is also more strict there than in many other places. I wouldn't mess around.

I would be very concerned about the hours, especially if the vessels were used exclusively for charter. The degree of maintenance is all about profit & loss as opposed to an owner's pride and caring. A couple of motor rebuilds can increase your cost by 20% or more. Then there's...................

Hi,

I would echo NYCAPS thoughts on the condition of a heavily chartered vessel.

The term ridden hard and put away wet springs to mind when thinking of this.

Have these vessels out lived their ability to turn a profit for the Owner(s)?

The main engines might be ok as the distances in the Carib are not huge but everything else has probably had a good thrashing - generators, HVAC, RO Plant, toys, tenders, interior etc

Even if the owners happened to agree with your philosophy (which many business people don't), You're talking about a vessel they no longer need or want. The words 'good money after bad' often come to mind at that point.

It's sort of darned if you do, darned if you don't kind of thing. If the boat has been successful chartering then you're worried that the maintenance has gotten prohibitive and there are issues. If it's not been successful, you wonder why and wonder if it's been kept up. Either way trying to get a better understanding of why it is for sale might shed some light.

Two big Fords for sale. Both have the same milage and look good. One was owned by a little old lady. The other was a taxi. Kelly Blue Book says they're worth the same. Are they both worth the same to you as a buyer? That taxi may have been on a regular maintenance schedule, but I don't know it was adhered to, especially towards the end. I do know the owner didn't care about it except for the money it could generate. That little old lady doesn't want to get stuck on the side of the road. I wouldn't pay nearly the same for them.

To me these charter yachts would have to be a lot cheaper to interest me.