Florida, and in particular the Greater Ft. Lauderdale area, is known as a major center for the motor yacht and boating industry. South Florida currently employs 136,000 people in the industry, and according to recent figures in 2014, there were over 30,000 boats sold in the US, 19% of which were sold in Florida.
On June 16th, Florida Governor Rick Scott signed a bill into law which places a cap on the sales tax of $60,000 for any boat repairs in excess of $1 million and are completed within the State. The cap was effective as of July 1, 2015.
According to Scott and the Legislature, the law is intended to allow Florida to uphold its status as a world-leader in the marine industry. It also was designed to attract and retain repair and refits of luxury motor yachts and other upscale boats here, thereby increasing revenue, and bolstering the local economies.
“We will now be able to compete with states along the eastern seaboard and international yards,” said Phil Purcell, executive director of the Marine Industries Association of South Florida. “This tax cap will enable us to leverage this opportunity for additional jobs and economic growth.”
What are the Benefits of the Sales Tax Cap?
Limiting Florida’s sales tax to the first $1 million of repair costs, is expected to lure more repairs and refits to the area, particularly on larger luxury motor yachts.
With attractive repair and refit taxes, it also stands to reason that the bill will encourage increased sales of new and pre-owned luxury yachts in South Florida.
Purcell, speaking with the Press said, “tens of thousands of people in Broward County alone, everyone from electricians, carpenters, welders, plumbers, seamstresses and carpet layers to sellers of TVs,” should be attracted to the area thanks to the sales tax cap.
The bill was based on a 2010 law that capped Florida sales tax on the purchase of boats at $18,000 — or the first $300,000 of the sales price. That law helped boost boat sales, and increased sales tax revenue for the state, and now the hope is to get a similar bounce on repair and refits.
The new sales tax cap has been applauded by the several marine organizations, who agree that it will stimulate growth and bring more marine jobs and opportunities to the area. The recently announced acquisition of The Lauderdale Marine Center, (LMC), by international asset manager, The Carlyle Group, may have in part been prompted by the new law. The LMC is located in Fort Lauderdale on the New River. The 50-acre facility consists of a boatyard, marina and marine service center.
Financial Challenges, FYM Solutions
In addition to this new cap on sales tax, there are many other “taxing concerns” and financial implications for boat ownership in South Florida. For example, if you are purchasing a large vessel, you could benefit greatly by forming a “corporate entity” such as a Limited Liability Corporation, (LLC) to handle the costs of crew, repairs, maintenance, etc. This is particularly important if you are thinking about chartering your vessel.
The many financial considerations of owning and maintaining a crewed motor yacht could be challenging, but at FYM we do not think those potential difficulties should ever take away from the fun and excitement of luxury yacht ownership. That is why we offer “stem to stern” services designed to take most, if not all, of the hassles out of owning an upscale motor yacht.
We can help you with crews, all operations and maintenance issues, long-term charters, day cruises, and so much more.
If you are in the market for a refit, or your boat is in need of some overdue repairs now is the best time to take advantage of the new sales tax cap, and we can help you get the most out of this great incentive for Florida yacht owners!