Washington State Boat Luxury Tax?

[Knipet]

Been communicating with the little licensing office In Friday Harbor about getting my 2006 Cruiser 22 registered in WA. I bought it earlier this year and registered it in AZ my primary residence, but since moved it up to my summer home on Orcas Island. I was significantly shocked that they wanted nearly $2800 to register it! It's a used boat, and I had it previously registered in another state. I questioned as if they were charging me sales tax, but the licensing guy said it is subject to the "luxury tax". I further read in the regs that non-commercial boats over 16ft are subject to a 0.5% luxury tax.

Seems pretty excessive to me. Can anyone else verify if this seems right, and the way it is in Washington?

 

[starcrafttom]

If you buy a car or boat from out of state Washington slams you on the tax. Even when susans dad gave us a car from California we got nailed on the taxs. Just from memory i dont think you have to pay as much if its your boat that you are bringing from out of state.

 

[thataway]

I wondered why you need to register the boat in WA, unless you intend to leave it in Washington year around...and in a Marina or storage ?

We had our Federally Documented Cal 46 (Long Beach CA was hailing port), in Sequim Marina for 4 winters. The last winter, a "dock walker' caught up with us--and wanted a tax for keeping the boat in WA. I told them I was leaving Sequim in about 2 months and sent proof of sales tax paid in Calif..There was no further follow up from WA.

I believe that Washington State does have a "Watercraft Excise tax," in lieu of personal property tax. Calif has 1.1% personal property tax on their assessed value of boats.

 

[ssobol]

If you buy a car or boat from out of state Washington slams you on the tax. Even when susans dad gave us a car from California we got nailed on the taxs. Just from memory i dont think you have to pay as much if its your boat that you are bringing from out of state.

I seem to recall that if you show you paid sales tax in another state, WA gave you a pass when you brought the vehicle in. As long as tax was paid somewhere you were ok. But that was quite awhile ago and maybe it has changed. I moved in and out of WA state a couple of times and don't remember paying taxes on the cars I brought in.

In VA, you pay annual personal property taxes on boats. The rate varies from 0 to about 5% depending on what town/county you keep the boat in.

 

[Knipet]

I wondered why you need to register the boat in WA, unless you intend to leave it in Washington year around...and in a Marina or storage ?

Yes, I am planning on keeping it in a marina (and in dry dock) year round on Orcas. I bought, titled, and registered it in AZ, but didn't pay any sales tax since AZ doesn't have sales tax on used vessels or vehicles between private parties (non-dealers). So I have nothing showing a sales tax was paid, so WA wants its excise tax.

Really surprised the Sate of Washington considers a 13 year old C-Dory as a Luxury item!

 

[smckean (Tosca)]

If you can't demonstrate that you paid sales tax somewhere, then you must pay it here based on the value when you took ownership.

I had to do the same thing with a 5 year old Lexus automobile that my dad willed to me after his death. He lived in Oregon which has no sales tax so no sales tax had been paid when he purchased it new.

If it's not a typo when you say the luxury tax is 0.5%, then that must be quite some DC22 since it would be worth nearly $600,000 :wink:

 

[Knipet]

Tosca, good relevant information with your experience with your dad's Lexus coming from OR.

If it's not a typo when you say the luxury tax is 0.5%, then that must be quite some DC22 since it would be worth nearly $600,000 :wink:

I have no idea on what value they assigned to the boat, but it states somewhere on a state website the excise/luxury tax is .5 percent. This is how I always understood it:
1/2% = 0.5 percent = 0.05 multiplier.

Everything combined was a bit under $2800 which would also include regular registration and title fees, so maybe $2600 was the luxury tax? With that assumption they seem to value my used 2006 CD22 at $52,000. I would definitely dispute that as I didn't pay anywhere near that amount.

 

[pcg]

1/2% = 0.5 percent = 0.05 multiplier.

1/2% = 0.5 percent = 0.005 multiplier, so it must be 5% tax?

But now I'm confused. Let's suppose that while living in Oregon (which has no sales tax) I buy a used boat from an individual in another state that has sales tax, but that individual does not collect any sales tax from me. Some years later I move to Washington and go to register the boat.

Will I be charged a luxury tax on the boat when I register it? Based on what value? Is this a one-time charge?

 

[Knipet]

But now I'm confused. Let's suppose that while living in Oregon (which has no sales tax) I buy a used boat from an individual in another state that has sales tax, but that individual does not collect any sales tax from me. Some years later I move to Washington and go to register the boat.

Will I be charged a luxury tax on the boat when I register it? Based on what value? Is this a one-time charge?

Your scenario is the same as mine. I bought the boat and registered it in my primary home state of AZ where there is no sales tax on used boats and vehicles between individuals. So that in effect would be the same as OR with no sales tax at all, at least as it concerns this transaction. To register this boat in WA they wanted nearly $2800, which the bulk is the excise/luxury tax (one time assessment), and I'm assuming a couple of hundred in title and registration fees.

 

[JamesTXSD]

Tosca, good relevant information with your experience with your dad's Lexus coming from OR.

If it's not a typo when you say the luxury tax is 0.5%, then that must be quite some DC22 since it would be worth nearly $600,000 :wink:

I have no idea on what value they assigned to the boat, but it states somewhere on a state website the excise/luxury tax is .5 percent. This is how I always understood it:
1/2% = 0.5 percent = 0.05 multiplier.

Everything combined was a bit under $2800 which would also include regular registration and title fees, so maybe $2600 was the luxury tax? With that assumption they seem to value my used 2006 CD22 at $52,000. I would definitely dispute that as I didn't pay anywhere near that amount.

Based on .05%, that should work out to $260. It would be 5% to get it to that $2600 number, on a $52,000 evaluation.

 

[DayBreak]

Am I glad we live in Oregon! Long drive to Washington State to explore the waters of the San Juans and BC but everything comes with a price.

Checked out the 'Dept of Revenue - Washington State' on the web and found that if you "purchased a private motor vehicle in another state more than 90 days before moving here, you do not owe Washington's use tax."

Hope this helps others who may be thinking or planning a move to Washington State with vehicles or boats to transfer in regard to Title and Registration.

Gary and Colleen on 'DayBreak'

 

[smckean (Tosca)]

But now I'm confused. Let's suppose that while living in Oregon (which has no sales tax) I buy a used boat from an individual in another state that has sales tax, but that individual does not collect any sales tax from me. Some years later I move to Washington and go to register the boat.

Yeah, it's confusing. Back when I inherited my dad's Oregon car, I couldn't believe I had to pay $3000 or $4000 to have it registered in Washington, so I did some research. Here's what I remember:

When you purchase a used car/boat, and many other items I believe, you must pay sales tax on the purchase even though it is a used item. (I believe being a used item, they call it a luxury tax instead of a sales tax, but the rate is exactly the same.) So there are 2 scenarios: 1. you buy a new car; 2. you buy a used car. If you buy a new car without paying sales tax (as my dad did), and you bring this car you own to Washington, then you have to pay sales tax in Washington since you paid it nowhere else when you purchased it. In the same way, if you are buying a used car you still have to pay sales tax on that purchase. If you can't show you've pay the sales tax, then you have to pay it when you register in Washington (a sales tax state) even if you bought it from a private party.

BTW, there are lots of items you are supposed to pay sales tax on when you buy used, but hardly anyone ever does it, even though you are supposed to legally. Everyone gets away with it; hardly anyone thinks about it in a private party transaction, but it does happen for items that you have to register like cars and boats, because then the gov't knows about the transaction.

P.S. Just try to buy, say, a used lawn mower at a hardware store. I guarantee you they will charge you sales tax. If you buy that same used lawn mower from your neighbor, you're still supposed to pay voluntarily this sales tax to the state (at least in Washington you do). No doubt there are some exclusions to this such as no sales tax if you only sell 2 items per year, or less than $500 per year, or whatever, but generally, I believe sales tax is due new or used even between private parties.

 

[pcg]

if you "purchased a private motor vehicle in another state more than 90 days before moving here, you do not owe Washington's use tax."

Thanks for that. I've now modified our retirement plan...

Buy every high-cost item we might think we will ever need or want after retirement (oh the joy!), then wait ninety days before moving across the river to Washington, where there is a sales tax, but NO INCOME TAX, which Oregon has.

 

[smckean (Tosca)]

Checked out the 'Dept of Revenue - Washington State' on the web and found that if you "purchased a private motor vehicle in another state more than 90 days before moving here, you do not owe Washington's use tax."

Private vehicles do seem to be an exception, but it does not apply to boats.

-----------------from the website-------
If you purchased a "private motor vehicle" in another state more than 90 days before moving here, you do not owe Washington's use tax. RCW 82.12.0251(3). (Note: A "private motor vehicle" is an individually owned motor vehicle used for the personal transportation of the owner, with a load capacity of 1500 pounds or less.)

Pickup trucks with a load capacity greater than 1500 pounds, recreational vehicles, watercraft and trailers do not qualify for this exemption."
--------------------------------------

 

[ssobol]

... With that assumption they seem to value my used 2006 CD22 at $52,000. I would definitely dispute that as I didn't pay anywhere near that amount.

What you paid and what something is valued are not necessarily the same.

I could sell you my car for $1, but that is not what you are going to be paying taxes on.

 

[pcg]

Pickup trucks with a load capacity greater than 1500 pounds, recreational vehicles, watercraft and trailers do not qualify for this exemption."

Oh well, it was fun to think about for a few minutes...

 

[thataway]

Under the circumstance, you are gong to have to pay some "sales" or possessory interest or "use" tax (The latter is a term a number of states used for collecting sales tax on boats sold in another state, then registered in that state ie: Florida did that for some time.

To establish the value of your boat--you should have a bill of sale, a canceled check, records of a wire transfer, or a copy of a Cashier's check--hopefully at least 2 of these. Then you may have to fine a protest. Also present a print out of what 2006 C Dory 22's sold for--For example, I would be happy to send a letter or e-mail stating what I sold a 2006 C Dory 22 in May 2018 for--The "marketplace" had records of the selling prices--and the C Dory for sale--currently would be good documents to present.

 

[Knipet]

What you paid and what something is valued are not necessarily the same.

You might be right in the eyes of a mindless bureaucracy. But what someone pays for something in an "arm's length" transaction in a free marketplace is a very good indicator of value. What if the boat I bought was a beat-to-death piece of junk that I planned to do a lot of restoration and paying a lot of sales tax for the repairs and materials. Would it still be right to value it at $52K.

I could sell you my car for $1, but that is not what you are going to be paying taxes on.

That wouldn't be an "arm's length" transaction in a free market. But rather an intentional attempt to circumvent the imposed taxes.

 

[ssobol]

....

I could sell you my car for $1, but that is not what you are going to be paying taxes on.

That wouldn't be an "arm's length" transaction in a free market. But rather an intentional attempt to circumvent the imposed taxes.

Or you could someone I like or is down on their luck and I'm helping you out by selling you a car at a price you can afford.

 

[Capn Jack]

You don't, "Own" anything anymore.
You just rent it from the state. :sad