Throughout my career of selling boats, sales tax has always been an issue. One of the first things I ask a customer before selling a boat is, “How would you like to address the sales tax issue?” Depending on the county in Florida in which the vessel is purchased, one will encounter sales tax on the gross amount of the sale between 6-7.5%. When purchasing a boat which costs upwards of a million dollars, the amount of sales tax a purchaser pays the state can be a considerable amount. However, there are ways to avoid Florida sales tax. The buyer could purchase a 90-day sales tax decal. This allows the buyer to close in the state of FL and keep the boat in local waters until 90 days after closing. After this three month period, the purchaser must remove the boat from Florida waters, and they must sign a tax affidavit proving that. Another option is to close offshore and register the boat in a state or jurisdiction that does not collect sales tax or has more advantageous tax policies. The problem with both these strategies is that it eventually removes the boat from the state of Florida, and thus takes away that revenue stream. The current tax policy discourages the purchase, use and maintenance of boats in the Sunshine State.
To keep boats/yachts in the state of Florida, legislation is being passed in the House of Representatives and Senate to cap sales tax on new and used boats at $18,000 in hope of saving Fl jobs and collecting new tax revenue. In this precarious economy, there are over 220,000 people employed in some capacity in the marine industry in Florida, and this legislation will protect them by increasing boats sales and generating more tax revenue. Currently, most boaters will purchase their crafts in states or countries with more favorable sales tax/use policies or not pay FL sales tax at all and simply remove the boat from the state. This proposed legislation will cap the sales tax at $18,000 and will reinvigorate the state’s marine industry and increase the state’s tax revenue by bringing and keeping boaters in Florida.
The measure caps the sales tax on boats sold in Florida at $18,000, or the amount that would currently be taxed on a $300,000 yacht. In most cases owners will simply move the boat out of FL to avoid this tax. They will create offshore corporations and register the boat within that corporation. The costs to create offshore corporations for the larger yachts can easily exceed $18,000. However, they will encounter cruising and re-selling restrictions when in the state of Florida. For roughly the same amount of money, if the sales cap is passed, they can pay the tax and keep/use/maintain/sell their boat in Florida with zero restrictions.
By capping sales tax and keeping boats in FL, the amount of jobs saved and revenue that will stay instate will substantially boost the boating industry: a key factor when unemployment is at an all time high in Florida. Marinas will continue to charge boats for dockage and sell fuel, brokers will sell more crafts, owners will use FL yards to complete work, etc. Many facets of the marine industry will benefit from this legislation.
However, on the other side of the coin are the buyers of boats that are under $300,000. Yes, it will certainly help the larger boat buyers, but what about the smaller shopper? At this point, it does nothing for them. I sell many boats under $300,000 and would like to see some type of tax incentive for that buyer as well. But one must look at what brings in the most revenue: the larger yachts. Despite the lack of benefit for the small-craft purchaser, implementing this sales cap will hopefully keep more boats instate, thus increasing revenue within the yachting industry in the state of Florida.