Newport Beach Case Study: 2007 Offshore Pilothouse for $895K
There is a 2007 Offshore Pilothouse for sale through your brokerage. As a Newport Beach yacht broker, you are thrilled to be selling this beautiful vessel. The boat is a shining example of what a mid-sized pilothouse should be, and you already have a couple of buyers in mind for it. The vessel has been meticulously maintained by professionals, which is good, because at the asking price of $895,000.00 your buyers going to expect it to be.
But Wait: Tax adds almost $70K
Selling a vessel in Newport Beach, CA means a 7.75% Use Tax is added to the cost of the boat. 7.75% is better than the 9.5% vessels sold in Marina Del Rey are subject to, but still adds almost 70k to the cost of that yacht. 7.75% brings the total of the boat up to $964,362.50, with $69,362.50 being attributed to California Sales and Use tax. That is about the same as a new, fully loaded, F-150.
Abolish that Tax Bill
There are legal ways to reduce the yacht's tax bill. Through the use of Single Asset Entities, we are able to eliminate California Sales and Use Tax on some vessels. Even after factoring in all the fees we can save your clients close to 80% on their tax bill.
California Sales and Use Tax are transaction taxes, and our law firm can create transactions that are non-taxable. We are not talking about some evasion strategy, or other means of avoiding CA Use Tax. We structure the sale in a manner that creates a non-taxable transaction.
If you think saving your clients almost $70K will help you sell more boats, I bet your right. A $900,000.00 yacht is a lot of money, there is no reason to make that purchase even more expensive.
But Wait: There’s More!
Single asset LLCs are key components in any asset protection strategy. Boats are liabilities, and equipment can and does fail. Situations are all too common where the liability from a catastrophic failure exceeds the insurance coverage. By transferring the vessel into a single asset entity, we can limit the owner's liability to the value of the boat, thereby protecting their other assets.
We are here to Help
The experienced attorneys at p.Law are here to help. We are transaction experts with a thorough knowledge of California Sales and Use Tax law. We have the extensive knowledge required to defeat California Sales and Use Tax.
If you want to learn more about how we can save your clients almost 80% on their next boat purchase give us a call or click the button below.