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Not for sale to US residents in US waters

Discussion in 'General Yachting Discussion' started by hat4349, Jan 22, 2008.

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  1. hat4349, Jan 22, 2008
    #1
    hat4349

    hat4349 Senior Member

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    I see this all the time in posting on Yachtworld and brokerage firms websites. Since the boats I have bought always have been in US waters I figure it probably has to do with taxes and/or laws governing safety etc... Can anyone provide specifics on this?
  2. clnewman, Jan 22, 2008
    #2
    clnewman

    clnewman New Member

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    I'm sure one of the brokers here can answer better than I. However, it's my understanding these vessels are typically foreign flagged, and no duty has been paid here in the US.
  3. C4ENG, Jan 22, 2008
    #3
    C4ENG

    C4ENG Senior Member

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    I believe it is to simply aviod the 6.5% sales tax?
    That's a nice chunk of change on a 15 million $$ purchase...Well worth some fuel and time to skip over to the Bahamas..
  4. JWY, Jan 22, 2008
    #4
    JWY

    JWY Senior Member

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    It is not an issue of tax but of US duty. Foreign goods pay a duty upon arrival into the US. If a foreign flagged vessel comes to US and is for sale, the assessed duty is 1.5% of market value. If the owner does not want to pay the duty, then the foreign vessel can be offered for sale but not to US residents while in US waters. Therefore prospective clients must be non US residents or the boat is taken offshore for a showing. There is a "boat show" caveat; also NAFTA exempts boats built in Canada or other trade countries.

    It is highly recommended that a customs broker be consulted for details and advice.

    Judy Waldman
  5. YachtForums, Jan 22, 2008
    #5
    YachtForums

    YachtForums Administrator

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    Good post Judy and a milestone... you just joined the YFAARP.
  6. brunick, Jan 23, 2008
    #6
    brunick

    brunick Senior Member

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    the what??
  7. hat4349, Jan 23, 2008
    #7
    hat4349

    hat4349 Senior Member

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    I can see where at $15,000.00 per $1,000,000.00 of the sales price this could quickly add up so that part I understand. But is it good business sense to eliminate such a large portion of the market by making this statement, seems to me it would be better to make it a negotiable item. Or am I being overly simplistic?

    I understand that if you have this kind of money running to the Islands for the yacht should not be a problem, but if I have this kind of money it seems I would want the convenience of having my yacht available anytime I want it by my primary residence. I guess I don’t deal in the high financial world to understand the complexity of this.
  8. YachtForums, Jan 23, 2008
    #8
    YachtForums

    YachtForums Administrator

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    Google AARP Brunick. ;)
  9. brunick, Jan 23, 2008
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    brunick

    brunick Senior Member

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    you meant this AARP?

    *lol*
  10. JWY, Jan 23, 2008
    #10
    JWY

    JWY Senior Member

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    Thanks, YF! :D

    Hat4349: The issue of duty primarily comes up when a yacht is offered for sale. A foreign flagged vessel can cruise here under an annually renewable cruising permit. "Negotiating duty" isn't an option. If the seller wants to include the US market, then he pays the duty before he can offer it for sale. Brokers frequently recommend owners pay the duty, but it is sometimes difficult for an owner to lay out a chunk of money to increase the market potential when it does nothing to add to the value of the vessel as to equipment or appearance.

    Judy
  11. hat4349, Jan 23, 2008
    #11
    hat4349

    hat4349 Senior Member

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    JWY thanks for all the good information, now I understand a lot more about this and even feel I comprehend this duty business. I am probably really dangerous now.
  12. Loren Schweizer, Jan 23, 2008
    #12
    Loren Schweizer

    Loren Schweizer YF Associate Writer

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    Happy Birthday, Judy!