$18,000 sales tax cap now law in Florida

[yachtbrokerguy]

The Florida Maritime Full Employment Act has now been signed into law and will become effective July 1, 2010. This law caps sales tax on a yacht purchased in Florida at $18,000. At the 6% rate there is now no addtional tax on boats sold over $300,000.
Since many of the larger yachts sold here were flagged in foreign countries and no tax was paid in the US, it is expected that many buyers will register their boats in Flodrida to avoid the foreign flag issues such as cruising permits, and Florida will actually get more tax revenue than before. Another advantage for a buyer is that they will no longer have to leave Florida after 90 days or 180 days, which was a requirement previously for non resident purchasers. This should keep more boats in Florida, and that will mean more boats and yachts getting work done at Florida boat yards, and more American crew.

I am not a maritime attorney or tax accountant but please feel free to contact me for more information.
Tucker Fallon

[Ross Macdonald]

If this is correct, it is a great thing. Now if California would put this in effect instead of forcing buyers to leave the state for a year, they would collect an unbelieveable amount of tax revenue. While these boats are out of the state (usually in Mexico) no money is being spent in California. Haulouts, bottom cleaning , boat maintenance, dockage, et al. All of it is being spent in Mexico. This mostly liberal state thinks that all boat owners are rich yachtsmen and don't seem to get the fact that all of the ancillary boat businesses pour alot of money into the local economies. Congrats to Florida. I am envious and also upset that California is so short sighted....Ross

[jack mattocks]

Missouri is trying to increase sales tax. We have a $2,500 maximum in lue of tax. Flordia seems to be realistic in these times.

[Hottub]

proactive. I can see how this will benefit in the end.

[Nonchalant1]

The Florida Maritime Full Employment Act has now been signed into law and will become effective July 1, 2010. This law caps sales tax on a yacht purchased in Florida at $18,000. At the 6% rate there is now no addtional tax on boats sold over $300,000.
Since many of the larger yachts sold here were flagged in foreign countries and no tax was paid in the US, it is expected that many buyers will register their boats in Flodrida to avoid the foreign flag issues such as cruising permits, and Florida will actually get more tax revenue than before. Another advantage for a buyer is that they will no longer have to leave Florida after 90 days or 180 days, which was a requirement previously for non resident purchasers. This should keep more boats in Florida, and that will mean more boats and yachts getting work done at Florida boat yards, and more American crew.

I am not a maritime attorney or tax accountant but please feel free to contact me for more information.
Tucker Fallon

Tucker,

Actually, I found that the non-resident thing went away when Florida changed their registration law to increase fees. Instead of a temporary cruising permit for 90 days, they now require a full Florida annual registration for non-resident cruisers, which is more expensive but lasts all year. My boat is now registered in two states.

[Angela]

Tucker,

Actually, I found that the non-resident thing went away when Florida changed their registration law to increase fees. Instead of a temporary cruising permit for 90 days, they now require a full Florida annual registration for non-resident cruisers, which is more expensive but lasts all year. My boat is now registered in two states.

I believe the cruising permit he's talking about is for the foreign flagged vessels. They have to have a cruising permit to be in the US, and they have to leave the US for x-number of days every year. I had a dockmate that would go over to the Bahamas and sit for his x-number of day - oh darn...what a life! LOL Upon return, he'd head over to Customs, show his paperwork for having been out of the US for the specified number of days and receive his annual cruising permit.

The anxiety with that is that given the current state of unfriendliness around the world these days, you never know when the US might yank all foreign cruising permits - then you're screwed if you're foreign flagged. Not likely, but possible. The reason for so many foreign flagged vessels is the sales tax issue. Even I considered it initially.

[yachtbrokerguy]

Nonchalant1,
The NON RESIDENT thing I was referring to is another program Florida has to encourage buyers to purchase in Florida. It is not for non residents who bring their boats here for the winter,it is just for buyers. Many years ago, to legally avoid Florida sales tax you had to leave within 10 days, then the state changed that so that dealers and brokers could issue a 90 day decal to a non resident buyer who intended to take the boat out of state. Just last year that tax exempt decal was extended to 180 days with the payment of a fee to the state.
The reasoning behind the extension was to allow an out of state buyer to use the boat here and spend money here for up to six months, before they returned to their home state and paid their sales tax there. If a buyer got a non resident exemption and decal he could not return to Florida for at least 180 days.
Now some buyers will pay the $18,000 tax here so that they can come back for the winter without restrictions. If their home state wants addtional tax, almost all states have reciprocal agreements where you get a credit for the tax already paid and only pay the additional difference.
Angela is right the cruising permit I was wrote about is for foreign flag vessels to cruise in the US. One of the draw backs to those permits is that that you had to leave the US for 14 days to renew (if also foreign built). Her dockmate could go 50 miles to Bimini, but it was much more difficult from the mid-Atlantic states.
Tucker Fallon

[ThirdHatt]

Angela is right the cruising permit I was wrote about is for foreign flag vessels to cruise in the US. One of the draw backs to those permits is that that you had to leave the US for 14 days to renew (if also foreign built). Her dockmate could go 50 miles to Bimini, but it was much more difficult from the mid-Atlantic states.
Tucker Fallon

I own a foreign flagged vessel that is here on a U.S. Customs and Border Protection Cruising Permit. Because it was built in the United States I do not have to leave the country at all. Once a year I just go to the Customs & Border Protection office and pick up a new annual cruising permit for free.

Flordia has been talking about passing this sales tax cap for a while now and I am glad they did it. I know several large yacht owners that would love to fly the American Flag and they all have their lawyers looking into that possibility right now. Foreign flagged vessels do have some advantages with respect to having foreign crew members. At this point I am not sure if it will make sense to move the documentation to the U.S. or not.

[yachtbrokerguy]

With an American documented vessel your crew must be American. That was another of the reasons why Florida passed the law called the Maritime Full Employment Act, more Americans get to have jobs.
However the vessel need not be documented (unless for financing) and the yacht can be simply registered in Florida with FL numbers on the bow. This way both Americans and non US citizens can still have an American flag, and there are no crew restrictions. I was a captain on a yacht owned by a Florida corporation that was owned by a non US citizen. I had to clear US customs coming and going to the Bahamas but there was no difference going in and out of the Bahamas for their cruising permit. I do not know what the consequences are in other countries.
Another advantage for owners of US built and US flagged vessels is they they can be legally chartered in the US.
Some current owners will want to spend the money to get a US flag but with the new tax cap very close to the cost of setting up a foreign corporation and getting the foreign flag, it will be more attractive to a buyer. I am sure that some of the countries that have set up offices here in Fort Lauderdale to expedite the foreign flag process will lower their rates, they have been using these registrations as a profit center for years.
Tucker Fallon

[Colwyn D]

I am also running a US built vessel on a cruising permit and agree with all ThirdHatt says. Although vessels take the nationality of their owners so a non US resident would not be able to own a US flagged vessel.
The cruising permit system is reciprocal between various countries and I applaud the US authorities on allowing it. I can assure them it brings in plenty of revenue, Well, plenty of mine!