It doesn’t take long for yacht refit costs to climb. But for large jobs, there is a way to save.
Since 2015, yacht owners in Florida have taken advantage of the sales and use tax cap on repairs of boats. “When a yacht gets to $1 million in qualified refit or repairs, then they no longer are responsible for additional sales tax,” said Patience Cohn, industry liaison with Marine Industries Association of South Florida (MIASF).
The nonprofit trade group initiated legislation to provide a competitive edge to local marine businesses that led to the tax incentive for yachts getting repair work done in Florida. Yacht projects must meet certain requirements, Cohn said. For example, they must use single-source billing, through a company like a shipyard or management company, so that there is a single audit source.
Several yards in Fort Lauderdale have worked with their clients to help them take advantage of the savings. The general manager of Marina Mile Yachting Center, David Hole, said he recently was able to extend the tax credit to an owner when the yacht’s refit job expanded in scope and the tax cap threshold was met. “I informed the captain that their tax had been capped and they would get no more tax,” Hole said.
Georgia has had a similar cap since 2017, but the cap is on $500,000 of work for repair and refit. “The Georgia state refit tax caps still run under the same rules: $35,000 cap on materials, regardless of what you spend,” said George Whitehouse, business development director of Savannah Yacht Center in Savannah, Georgia, where the total tax rate is 7%. “It can be hefty savings if you’re going through a large refit or large paint job, or whatever.”
Several states also have exemptions, discounts, or caps on vessel taxes. Tax laws continue to change, but currently, these states include Alabama, Connecticut, Maryland, Massachusetts, Maine, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, and Virginia.