Purshasing Boat out of State, Tax Questions HELP!

["another IT GUY"]

I'm thinking about buying a boat located in Illinois. Would I have to pay sales tax on it (private party). I've heard that you won't have to pay, is that true??? I've heard i'll have to pay tax on the trailer since it has a title. HELP!! Someone please chime in on this asap. Thanks!

[mamohr686]

I just bought a used boat from missouri. It is very important to get a clear title for the boat and if there is a title for the trailer, then you will also need to get a title for the trailer. If the state of IL doesn't require a title for the boat (like ND) and trailer you will have to get a bill of sale to register and title it in MN for proof of ownership. When you get the lifetime trailer sticker you will have to pay tax on the value of the trailer only.

["another IT GUY"]

THANK YOU!!!!!!

[CJH]

I believe you do have to pay sales tax on it, but not sure. I can't remember the name of the tax, but I believe that when you buy something out state, technically you are responsible for the difference between the state you bought it in vs. MN.

So for example, if you paid 5% when you bought the boat and if MN's was 7%, you would have to pay the 2% difference to the state. If you didn't pay any, you would be responsible for the 7%.

I would double check this with your tax preparer, but I personally know some people got dinged on this recently when they purchased equipment for their business out of state (they didn't pay any tax and now are responsible for all of it). Their is state sales tax on everything other than clothes I believe, so I don't know why boats would be exempt. I also know the state is cracking down on this, as they have lost a ton of revenue from people buying stuff out of state on the internet and never reported it.

The good news would be that I think you are eligible for a refund if you pay more in tax out state than you would have to pay to MN. (again I would double check this)

Any tax professionals out there that can confirm or deny any of this?

Good Luck!

CJH

[mamohr686]

I just went through it all. You have to assign a value for the boat and trailer, but you only have to pay tax on the trailer for a private sale. You would only have to pay tax on a boat or motor if you buy it through a dealership.

[CJH]

That maybe true. I misunderstood and was thinking "new", it may not apply for a "used" private party transaction.

[FishGUY]

Mark is right on with his responses, I just got a boat form Wisconsin.