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.”
Benefits of the 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 Considerations for Motor Yacht Owners
In addition to the changes in the application of 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.
The many financial considerations of owning and maintaining a crewed motor yacht could be challenging, but at 26 North Yachts we do not think those potential hassles should ever take away from the fun and excitement of luxury yacht ownership. That is why we offer the services of our sister organization Florida Yacht Management, or FYM.
FYM offers everything from dockage and repairs to engineering and crew services!
By partnering with FYM you not only will save significantly on your operational costs, you will take the challenges out or motor yacht ownership, and instead, enjoy all of the reasons you made your yacht purchase in the first place.