Rules of the Road: A review of taxes that apply to Florida boat sales

Nov 13, 2018 by Jake DesVergers

Rules of the Road: by Capt. Jake Desvergers

It’s that time of year again: boat show season. Events at Cannes, Genoa and Monaco previewed the strong sentiment that is expected at Fort Lauderdale, Antigua, and Miami.

With the recent proliferation of trade tariffs between the United States and the European Union, many colleagues and clients have inquired as to their effect on taxes. This is a very complicated issue and must always be discussed with one’s own attorney and accountant. Every situation and yacht are different.

However, with the Fort Lauderdale International Boat Show in full swing at the publishing of this column, a summarized refresher of taxes affecting boat sales in Florida is timely.

Sales and use tax

Under Florida law, all boats sold, delivered, used or stored in the state are subject to sales and use tax. Dealers and brokers are required to collect tax from the buyer at the time of sale or delivery.

Maximum tax

Thanks to the efforts of the Interna­tional Yacht Broker’s Association (formerly FYBA), the maximum tax on the sale of a vessel is $18,000. This limit was set back in 2010 and has proved to be very advantageous for both the state and yacht owners.

The maximum tax on the repair of a boat or vessel is $60,000. This cap is to be applied to each boat repair occurring in Florida. Subsequent and separate repairs are each subject to a $60,000 cap.

When is tax due?

Unless a yacht is exempt, it must be titled or registered with taxes paid within 30 days of the purchase date or the date the boat entered Florida; and within 90 days after the boat enters Florida when it is documented, licensed, titled, or registered in another state.

Specific exemptions

  • Boats sold to nonresidents:  A boat sold by or through a registered dealer or broker to a purchaser who is a nonresident of Florida at the time of taking delivery of the boat in Florida is exempt. This exemption applies to the sale of a boat, including any accessories, but does not apply to the sale of a boat trailer.
    There are certain time deadlines wherein the boat must leave Florida waters. These limits range from 10 to 180 days.
    Important to note is that this exemption does not apply to a Florida resident, an entity where the controlling person is a Florida resident, or a corporation in which any officers or directors are Florida residents.
  • Foreign-flagged vessels: Foreign-flagged vessels holding a valid “License to Cruise in the Waters of the United States,” issued by U.S. Customs pursuant to 19 Code of Federal Regulations 4.94, are not subject to Florida use tax.
  • Boats imported for sale: A boat that is brought into Florida for the sole purpose of sale at retail by a registered boat dealer or broker is exempt from Florida use tax. The boat must be under the care, custody and control of the dealer or broker, and personal use of the boat is not permitted.
  • Boats temporarily docked in Florida:  When Florida sales or use tax has not been paid on a boat brought into Florida, the boat is not subject to use tax when the boat remains in a registered facility that rents dockage or slippage.   That period of time cannot exceed a total of 20 days in any calendar year. The 20-day period begins on the day the boat is docked at the facility.
    If the boat enters Florida for repairs or modifications at a registered repair facility, it may remain in Florida tax-exempt until the repairs or modifications are completed. The 20-day period is not in effect while the boat is being repaired or modified. Once the repairs are complete, the owner has the balance of the 20-day period to remove the boat from Florida. Storage of a boat at a registered repair facility does not qualify for tolling of the 20-day time period.

Penalty and interest

For those who feel they can avoid or circumvent these rules, be aware that the monetary penalties are severe. A buyer who attempts to evade tax by submitting a fraudulent affidavit is subject to the tax due, interest and a mandatory 200 percent penalty. The buyer is also subject to a fine of $5,000 and 5 years in prison.

Capt. Jake DesVergers is chief surveyor for International Yacht Bureau (yachtbureau.org). Comments are welcome below.

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