Subject:  Tax on Boat Purchase
Date:  Fri, 19 Jan 2001
From:  Darlene

A friend told me that we may have to pay a 7% luxury tax on our boat every year because the value is over $50,000.00 Is this true? I figured we would have to pay personal property tax based on the boat's value, but I thought that was charged at 1.5 % of the value.

Darlene

Answer

Date:  09 Feb 2001

Hello Darlene,

I think your friend is having some fun messing with your mind.

The federal luxury tax for boats was repealed several years ago, and only applied at the time the boat was sold. The dealer was responsible for collecting the tax.

There may be other taxes that apply to boats; this isn’t one of them.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.