State of Texas boat buyers beware -

As many of you know or have read, Texas recently passed a sales tax cap on boat purchases limiting the tax at $18,750 for boats up to 115 feet or $3M.
Well, as it turns out this cap ONLY applies to boats that you buy in Texas.
If you read the bill (HB 4032), there isn't anything that states that the cap only applies to boats sold in Texas and Texas Parks and Wildlife will charge the full 6.25% to register your boat in Texas if it was not sold in Texas waters.
If you're buying a boat from out of state you will be charged a use tax for Texas which would be offset by any sales tax that you paid in another state.

Q: What's the only thing that grows in Arlington?
A: The swelling from your head from getting jacked!

All's Well said:

As many of you know or have read, Texas recently passed a sales tax cap on boat purchases limiting the tax at $18,750 for boats up to 115 feet or $3M.

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Should the max be 300K?

6.25% x $300K= $18,750

Great info, thanks for sharing!

Chris-380 said:

Should the max be 300K?

6.25% x $300K= $18,750

Great info, thanks for sharing!

Click to expand...

The sales tax cap is $18,750
So any boat that you buy up to $3M gets the benefit of no tax beyond the $18,750
Unless you buy it out of state then you get the full 6.25% of the purchase price applied either as sales tax or use tax

Sounds similar to what FL did several years ago, capped the sales tax.

What's unique is the bought out of state piece. I bought a boat in NC then immediately took it to FL. The cap in FL applied even though I bought the boat out of state.

FL and Maryland both have laws which require you to have state registration if you spend more than 6 months in the state without leaving.

Does TX have that law? If not, maybe you don't even have to register it with the state (as long as it is a documented vessel).

Does TX have reciprocal agreements with other states?

For example if you have paid the sales tax (to the proscribed limit) then take the boat to Maryland, you do not have to pay the tax in Maryland, they count what you have already paid in FL.

If TX has reciprocal with other states, then pay the tax in FL (or wherever) then bring the boat to TX.

Like the OP stated in post 1, even if your sales tax has been satisfied, some states will charge a "usage tax" if you stay long enough. Florida being one of them

Fred,
Can you move the boat to Alabama (or Florida, except finding a slip near Texas is going to be difficult due to the damage Hurricane Michael did to marinas in NW Fla.), establish residency for registration purposes, then at a later point move the boat to your Houston? The idea is to register it out of TX then "move" to TX after you satisfy the residency requirements, this avoiding part of the sales and use taxes?

fwebster said:

Fred,
Can you move the boat to Alabama (or Florida, except finding a slip near Texas is going to be difficult due to the damage Hurricane Michael did to marinas in NW Fla.), establish residency for registration purposes, then at a later point move the boat to your Houston? The idea is to register it out of TX then "move" to TX after you satisfy the residency requirements, this avoiding part of the sales and use taxes?

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I doubt it Frank
Texas does offer a $15 fee for “new residents” to transfer their boats in to Texas. But I have an established residence there already.
I’m not trying to avoid paying tax in Texas, I just thought that the cap would apply as I had read nothing that included this little detail
I have talked with one of the bill sponsors and his office confirmed that they only want it to apply to boats sold in the state. Protecting brokers and sellers in the state.
I could register it and leave it in any state but Texas only allows boats from out of state in their waters for 90 days with a permit that you can only get twice a year

Just your standard public service announcement to warn others to fully consider the specifics of the tax cap.