Wednesday, April 15, 2015

New York Sales Tax Break for Expensive Yachts

Two days ago, New York Governor Andrew Cuomo signed a new revenue bill, A. 3009, that eliminated the state's sales taxes on boats and yachts that cost more than $230,000.

This important sales tax break is quite comprehensive:

1. If a boat or yacht is sold in NY, the NY sales tax is imposed on the first $230,000 purchase price.

2. If a boat or yacht is brought into NY, the NY use tax is imposed only on the first $230,000 of value.  

3. Boat leases are normally subject to sales tax too, but only on the first $230,000 of rental receipts. 

The tax break applies to all "vessels," which includes "every description of watercraft, other than a seaplane, used or capable of being used as a means of transportation on water."  Ocean liners, oil tankers, etc., would all seem to qualify. 

If David Geffen had bought his "Rising Sun" yacht for $200 million in NY, he would avoid the 4% NY sales tax on $199,770,000 of the purchase price and saved himself 7.99 million dollars.

His $9,200 of sales taxes paid would be a 0.0046% tax rate. 

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