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boat purchase

Old 10-22-2020, 08:10 AM
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I have an agreed and signed contract on a boat, broker contacts me yesterday. Say's seller wants to now use boat as a trade in with him. He will in turn sell me boat through dealership. Seller saves sales tax, broker benefits some how etc etc . Seems odd, I'm the only one not benefiting. Am I being paranoid?
Old 10-22-2020, 08:17 AM
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If you're not paying the same agreed upon price on the contract out the door you're getting screwed.
Old 10-22-2020, 08:24 AM
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It can sound fishy depending on how they explain it but it's really not unusual and shouldn't impact you at all.

If you're financing outside of broker, you just let your bank know (they'll be familiar with the process).

If cash, you're just giving broker the money instead of seller.

Good luck and congrats,

J
Old 10-22-2020, 08:38 AM
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Sounds like the dealer your seller is buying from is doing a pass-through.
As long as the terms you agreed upon remain the same it's not unusual. May even go smoother as far as the paperwork is concerned.
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Old 10-22-2020, 08:46 AM
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Seems they need to offer you some compensation for the trouble of re-doing all the paperwork.
Old 10-22-2020, 08:54 AM
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Originally Posted by HANNAH GRADY View Post
Seller saves sales tax ...
On what ... his new purchase? In each purchase transaction, the buyer must pay the sales tax based upon the sales price. A credit for a trade-in should not change the sales tax amount as far as I know. What am I missing? Someone's ox is being gored. Sounds like a set up for fraud somewhere along the line.
Old 10-22-2020, 08:56 AM
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I would not have an issue with it but it's extra paperwork and your time is worth something so why should you spend your time to benefit two other parties. I would fire back saying something like I am not opposed to this but its going to consume more of my time to help you two out. I would like a free 100-hour service from your dealer for the trouble. Substitute service with detail or whatever.
Old 10-22-2020, 09:13 AM
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I did ask for some concessions, broker said "fine, do it the way it was originally" Now I don't want to be the bee at the picnic
Old 10-22-2020, 09:14 AM
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Happens all the time, its just a pass thru sale. Seller is saving the difference in sales tax between his boat price and the new boat price. Just like the savings when you trade a car in on a new car. You only pay tax on the amount owed. If you sell your boat for 40 and buy a boat for 50, you pay tax on the 10K difference. Saves the seller money, doesn't affect your purchase at all.
Old 10-22-2020, 09:22 AM
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Originally Posted by HANNAH GRADY View Post
I did ask for some concessions, broker said "fine, do it the way it was originally" Now I don't want to be the bee at the picnic
If the parties are not family or close friends then do it the way you originally signed the contract. Why try to navigate the unknown possibilities of what if's? .......unless there is something in it for you.
Old 10-22-2020, 09:24 AM
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There is no issue with that. I have done that with cars. Basically all it is doing is saving the seller sales tax on the new boat. Dealers do it as a courtesy to the buyer.
Old 10-22-2020, 09:26 AM
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I'm not sure what state you are in, but you might be on the hook for sales taxes in a purchase from the dealer, but not if it's a brokered deal. I purchased a brokered boat from a major dealer and expected to pay sales tax. I was quite surprised and pleased when I found out a brokered deal is an sale between individuals and not taxed, at least in NC. If I had bought directly from the dealer, I would have paid the maximum $1,500 in sales tax on a boat transaction. If you are on the hook for sales tax, I'd ask the broker to offset his commission to leave you in the same position.
Old 10-22-2020, 09:34 AM
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Originally Posted by Pez Vela View Post
On what ... his new purchase? In each purchase transaction, the buyer must pay the sales tax based upon the sales price. A credit for a trade-in should not change the sales tax amount as far as I know. What am I missing? Someone's ox is being gored. Sounds like a set up for fraud somewhere along the line.
Trade in serves as a credit. New boat price - trade in price = total sale price. It basically reduces the sales price (what you pay tax on) by the value of your trade in. That’s how it worked on my last boat purchase anyway.
Old 10-22-2020, 10:01 AM
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Originally Posted by Pez Vela View Post
On what ... his new purchase? In each purchase transaction, the buyer must pay the sales tax based upon the sales price. A credit for a trade-in should not change the sales tax amount as far as I know. What am I missing? Someone's ox is being gored. Sounds like a set up for fraud somewhere along the line.
Each state taxes the sale differently. My state taxes the entire purchase price, regardless of trade-in. Other states only tax the difference from the trade. Likely the seller is able to discount the tax by the amount of the trade-in.
Old 10-22-2020, 10:08 AM
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I have never done this so I really don't know. Could there be any potential down the road advantage to doing it this way as you are 'technically' now buying the boat from the dealer and not from the private party. If some unexpected issue with the boat comes up I think I would rather have the potential recourse of having bought from a dealer than from a private party, even in an "as is" situation. Just something to think about.
I am curious why a dealer would do this as I don't see any 'upside' for them, only potential exposure.

Last edited by NedLloyd; 10-22-2020 at 10:15 AM.
Old 10-22-2020, 10:20 AM
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Originally Posted by Yacht Huckleberry View Post
Trade in ... reduces the sales price (what you pay tax on) by the value of your trade in.
Originally Posted by t500hps View Post
Each state taxes the sale differently. My state taxes the entire purchase price, regardless of trade-in. Other states only tax the difference from the trade.
I learned something new. Thanks.
Old 10-22-2020, 10:28 AM
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I think you're being paranoid, unless you're paying more for the boat. If you were planning to have the seller split the transaction for the hull versus the motors and electronics and accessories (for tax purposes, as you'd only be required to pay the DMV the sales tax on the registerable part of the vehicle, the hull), you won't be able to do that buying from a Brokre/Dealer, as they are typically required to collect sales tax themselves for the entire purchase price.

If you weren't planning to do that, the only person getting screwed is Uncle Sam's tax revenue (rightfully so). Seller saves the tax on the newer boat (only pays for the difference between new boat and trade in value). Broker gets some cash (surprised this isn't worth more than the tax savings honestly). You get the boat from a Broker/Dealer, which may offer some peace of mind in a short warranty (it may not, IDK).

It's a win-win-draw sale... I don't see any loser except the tax man, and screw him anyway.
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Old 10-22-2020, 10:32 AM
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Seller saves sales tax on trade dealer handles paperwork win for you
Old 10-22-2020, 01:34 PM
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thanks for feedback, I think I'll just put away my paranoia and move forward

Old 10-22-2020, 01:42 PM
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The sales tax implications are the best way to look at the transaction. I too am paranoid about change, but it doesn't mean its wrong.

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