14 Jul Do I owe tax on my Florida boat if I take it to N.J.?

Q. I have a boat in Florida that I paid $18,000 of sales tax and use tax on in Florida when I got the boat. If I take the boat to New Jersey for the summer, not permanently, do I need to pay any sales or use tax?
— Sailor

A. We’ve got good news for you.

Reciprocity between states for out-of-state purchases received outside New Jersey is detailed in Publication ANJ-7, Use Tax in New Jersey.

It says when sales tax is paid to another state, “New Jersey will allow a credit against the use tax due, provided that the other state allows a similar credit for sales tax paid to New Jersey.”

If the sales tax rate in the reciprocating state is lower than the New Jersey tax rate, use tax is due for the difference, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.

Florida does allow a credit for sales tax paid to another state, he said. Florida sales tax rates vary by county, ranging from 6% to 7.5%.

To help the New Jersey boating industry remain competitive, as of Feb. 1, 2016, a change in the law was enacted providing a 50% exemption and capping sales tax at $20,000 for any new or used boat sale, Becourtney said.

“Florida caps sales tax on a boat at $18,000, which you noted is the amount of Florida sales tax that you previously paid,” he said. “As the applicable New Jersey sales tax rate is 50% of the regular 6.625% tax rate, or 3.3125%, the Florida tax paid would have exceeded this, so you would not be liable for any use tax.”

Happy sailing!

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This story was originally published on July 14, 2021.

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