A broker told me , as a selling point, that if I use a “broker” to sell my Florida boat, and then use a “broker” to buy the next boat, that I would be able to save the sales tax on the value of what my boat sold for.He claimed that was only doable with a broker.
Anyone have any knowledge of this?
See you in Paradise!
I’m not convinced he is representing the matter entirely truthful.
According to Florida law, the purchase of your new vessel and the trade-in of your old vessel must be consummated in one single transaction.
Your trade-in vessel must be placed into dealer inventory for resale.
I have first experience with this in Washington State. It worked here.
Florida brokers can reduce the sales tax due for a buyer by subtracting the selling price of the trade-in vessel therefore making the total amount taxable the difference between the selling prices.
This must be properly documented and executed. If you play by the rules, the savings can be significant.
But, the same does not hold true if an individual trades with another individual…correct?
A vessel may be traded in towards the purchase of another vessel with the resulting sales tax savings only through a Florida registered and licensed yacht broker or dealer. It must be a sale and purchase by a Fl. broker/dealer in a single simultaneous transaction. This answers the questions of FSBO and trade in with intention of delayed purchase.
Well — perhaps it could if done correctly. If you are trading a $60,000 boat for an $80,000 boat, it seems to me that you could sell your boat for $1,000 and buy the other boat for $21,000. Just a thought.
All this sales tax thru brokers assumes the boat will stay in Florida and you are a Florida resident. You have, I think, 90 days to get out of Florida if you are not a Florida resident and you avoid Florida sales tax altogether. I bought privately in Florida and left in 2 weeks; no Florida sales tax.
But I believe in that situation you are liable to your state of residence for the sales tax. If they discover your purchase and if they realize you did not pay Florida sales tax they’ll send you a bill
for it. There was a lot of turmoil some years back on a similar issue regarding Internet sales.
Florida has extended the Sales Tax Exemption from 90 days to 180. So yes, if you buy a boat in Florida through a licensed broker, you can stay in the state for 180 days without paying sales tax, certain conditions apply.
But I think the point of the original post is that if you are buying a boat in Fl. and required to pay sales tax, trade-in under certain conditions can help save the sales tax total due.
I bought privately in Florida and left in 2 weeks; no Florida sales
I just caught this mistake. Private buyers must pay sales tax in
It is only licensed brokers that can offer the Affidavit for Sales Tax Exemption.
If someone bought a boat privately in Fl. without paying sales tax, I would recommend seeking advice from a Florida maritime attorney if you plan to return to Fl. or if you plan to sell it to a buyer who might cruise Florida.
Just so there’s no confusion in terminology and to clear up a minor point.
The exemption for a purchaser in Florida who is going to remove the purchased boat from the state applies even to private sales. Florida licensed brokers are required by the state to collect the sales tax due, unless a specific exemption applies (in the situation being discussed, removal from Florida within the “grace” period – Judy says it’s now 180 days). The seller in a private sale is not required to collect the sales tax; the burden is on the buyer to pay the sales tax (if the boat isn’t exempt).
The tax paid to the “other” state where the boat is going to be taken after the purchase is a _USE_ tax, not a sales tax. Generally speaking, a state’s USE tax is the same percentage as it’s SALES tax.
This is generally true in any state that has a sales tax or use tax. The exemption period may vary as well as the tax rates.
I won’t go into any more of a discussion on this here, but just wanted to clear up some misperception that has already creeped into the several posts on this topic. There’s lots of info about the subject of taxes (both sales and use) on the internet and in the archives.
Bob and Judy
Bottom line — When you go to register your vessel, you will either pay sales tax at time of sale, or you will pay sales tax when you attempt to register your vessel in your home state.
There are two ways to reduce your sales tax burden — via a trade in which reduces the taxable amount (because you already paid tax on the trade in), or by purchasing the boat for export (i.e. forming a corporation in the Cayman Islands that purchases the boat). Going the offshore route has its advantages, but unless the boat is a high dollar item, the fees associated with maintaining offshore ownership often outweighs the tax advantages of doing so.
Gone are the days where you can cheat the guvmint out of their share. They will find out whether you paid or not and they *will* collect.
There is no “exemption” anywhere.
You will either pay sales tax in the state in which you purchase the vessel or you will pay sales tax in the state in which you register the vessel, but one way or the other, you *will* pay sales tax. Which state you pay in is determined by whether your state and the state in question have a reciprocity agreement in place. Some states do; others do not.
Here are the rules for Florida:
If you are from out of state and buy from a broker, the broker will not collect sales tax with the caveat that you get the boat out of Florida within either 90 or optionally 180 days if you purchase an extension decal.
This does not absolve you of your sales tax burden however. When you attempt to register the boat in another state, they will want to see proof that sales tax has been paid. Since you paid no sales tax in Florida, you will have no proof of same and will be required to pay sales tax in your state in order to successfully register your vessel.
If your state requires the payment of sales tax in conjunction with the purchase of a vessel, you *will* pay that sales tax, regardless of which other state you purchased the boat.
It is for this very reason that you will often see boats advertised “not for sale to US citizens while in US waters.” The boat was originally purchased by an offshore shell corp. or some other offshore entity for the purposes of avoiding taxation. If the boat were to be sold in the US, taxes would have to be paid by all parties. Since the seller doesn’t want to pay those taxes, he can only sell the boat to another offshore entity.
Unless you take your registration offshore, you are obligated to pay.