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Sales tax break when selling boat and buying another within 6 months NJ?

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Sales tax break when selling boat and buying another within 6 months NJ?

Old 11-03-2010, 01:05 PM
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Default Sales tax break when selling boat and buying another within 6 months NJ?

Sorry if the topic a bit cryptic. Trying to understand how paying taxes on a boat works when you've sold another boat to move up here in NJ.

Basically a broker told me that when I sell a boat (I assume using a broker) I have 6 months in which to buy another one and I can apply the sale price of my boat against the cost of the new one to pay less tax.

Example:
Pay $100k for boat pay $8k in tax
Sell boat for $100k and buy another for $250k
Pay tax on $150k ($250k less $100k)

Does this work if I do it on my own, do I have to use a broker or I am way off base and there's no such thing.

Thanks again folks,

J
Old 11-03-2010, 01:40 PM
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Edit, I think I might have spoke to soon.

Last edited by beber; 11-04-2010 at 06:41 AM.
Old 11-03-2010, 02:24 PM
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Originally Posted by Esuomm1 View Post
Sorry if the topic a bit cryptic. Trying to understand how paying taxes on a boat works when you've sold another boat to move up here in NJ.

Basically a broker told me that when I sell a boat (I assume using a broker) I have 6 months in which to buy another one and I can apply the sale price of my boat against the cost of the new one to pay less tax.

Example:
Pay $100k for boat pay $8k in tax
Sell boat for $100k and buy another for $250k
Pay tax on $150k ($250k less $100k)

Does this work if I do it on my own, do I have to use a broker or I am way off base and there's no such thing.

Thanks again folks,

J
This works in Ohio with a couple caveats. One is that it must be the same broker. Two, he has to file your tax documents. Example.... You sell a boat through XYZ dealer for $100,000. Then, within 6 months, you buy a boat for $250,000 through the same dealer, he shows your old boat on trade for what it sold for. Your tax liability is $150,000 X your rate. I have no idea what happens in Jersey, but I will say that here, the "6 month" thing is a guide, and NOT a law, though 6 months is exactly what I was told. This practice (called a paper trade) needs done correctly to be legal. I've had many conversations with the Ohio tax rep regarding this exact scenario.
Old 11-03-2010, 03:19 PM
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Thank you guys.

Beber, went to school at UNCW, great part of the country and an excellent part of the ICW (or at least it used to be).

A broker briefly mentioned it here while I was shopping around with him and I wanted some clarification. I'll follow up with him again but I am glad to know it does exist somewhere at least.

Thank you again,

J
Old 11-04-2010, 06:41 AM
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Originally Posted by Esuomm1 View Post
Thank you guys.

Beber, went to school at UNCW, great part of the country and an excellent part of the ICW (or at least it used to be).

A broker briefly mentioned it here while I was shopping around with him and I wanted some clarification. I'll follow up with him again but I am glad to know it does exist somewhere at least.

Thank you again,

J
Small world as I'm originally from NJ but now live in Wilmington and am going to UNCW at night for an MBA. I grew up in Hackettstown and then lived and worked in Morris county for a few years after college before moving to Wilmington.

The more I think about your situation the more I think your broker is right and I am wrong. I remember buying a new car in NJ and not having to pay the sales tax for the portion of the new car that my trade in was paying for.

See page 7 of the document below. Trade in value for motor vehicles is not taxed. However, if you sell the boat/car on your own and then use the cash to buy a new one, I believe you are taxed.
http://www.state.nj.us/treasury/taxation/pdf/njcar.pdf

Last edited by beber; 11-04-2010 at 06:53 AM.
Old 11-04-2010, 09:48 AM
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No such thing unless the deals are done thru a broker or dealer at the same time and are intertwined.

Your broker I believe is blowing smoke up your ass, never ever heard of it in NY or NJ.
Old 11-07-2010, 01:55 PM
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Perhaps you cold find a dealer in one of the economic improvement zones (which include all of Salem County) where the NJ sales tax is half. I wonder if auto dealers are setting up shop there or why yacht dealers aren't taking advantage of this. Perhaps the discount isn't valid for big ticket items?
Old 11-07-2010, 04:33 PM
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Originally Posted by t3rockhall View Post
Perhaps you cold find a dealer in one of the economic improvement zones (which include all of Salem County) where the NJ sales tax is half. I wonder if auto dealers are setting up shop there or why yacht dealers aren't taking advantage of this. Perhaps the discount isn't valid for big ticket items?
Cars and boats do not count!

On the OP - EESSRR8EERS(sp) is correct on all counts.
Old 11-07-2010, 05:26 PM
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Originally Posted by Jimm View Post
Cars and boats do not count!

On the OP - EESSRR8EERS(sp) is correct on all counts.

"....... we are located in an Urban Enterprise Zone, so boats and over the counter parts carry a reduced 3.5% NJ sales tax."

http://www.yachtworld.com/trentonmarine/

There used to be a broker in Perth Amboy with 3.5% and there was another in Long Branch who may still be there but never had a web site.

Supposedly there has been some issues of them closing the deal in the 3.5% areas but the boat being miles away out of the "Enterprise" zone.

Old 11-07-2010, 05:43 PM
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and another dealer... http://www.schoonerislandmarina.com/yacht_sales.html
Boats seem to be subject to the discount, but trailers not.

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