Big tax break (again) for California RVers
SACRAMENTO, Calif. (Sept. 4, 2007) -- California RV buyers who keep their vehicles out of the state for at least 90 days after purchase will no longer have to pay state sales tax. That’s the way it was until 2004, when the state changed the length of the out-of-state-stay to one year. Now, a new budget passed by the Legislature last Tuesday changes the time requirement back to only 90 days.
The rule also applies to buyers of yachts, and is not being well received by many people. "Everybody recognized this as a scam," Lenny Goldberg, executive director of the nonprofit California Tax Reform Association, told the L.A. Times. "People had even made a business out of this scam. And now the state is going to permit it again."
A book for yacht owners, "The 90 Day Yacht Club Guide to Ensenada," schools Californians on the art of avoiding sales tax by temporarily docking in Mexico.
Since 2004 under the one year rule, the state had added $45 million annually to its coffers. That will now be gone under the new 90-day rule.
A provision intended to keep the one-year requirement in place was removed from the budget last month at the insistence of Senate Republican Leader Dick Ackerman of Irvine who owns a yacht. Other legislators weren’t happy. "Hopefully they will make him president of the yacht club or something," said Assembly Speaker Fabian Nunez, who opposed the change back to the shorter requirement.
So, for now at least, if you live in California, when you buy a new RV and keep it out of state for a minimum of 90 days, you'll pay no state sales tax.
The rule also applies to buyers of yachts, and is not being well received by many people. "Everybody recognized this as a scam," Lenny Goldberg, executive director of the nonprofit California Tax Reform Association, told the L.A. Times. "People had even made a business out of this scam. And now the state is going to permit it again."
A book for yacht owners, "The 90 Day Yacht Club Guide to Ensenada," schools Californians on the art of avoiding sales tax by temporarily docking in Mexico.
Since 2004 under the one year rule, the state had added $45 million annually to its coffers. That will now be gone under the new 90-day rule.
A provision intended to keep the one-year requirement in place was removed from the budget last month at the insistence of Senate Republican Leader Dick Ackerman of Irvine who owns a yacht. Other legislators weren’t happy. "Hopefully they will make him president of the yacht club or something," said Assembly Speaker Fabian Nunez, who opposed the change back to the shorter requirement.
So, for now at least, if you live in California, when you buy a new RV and keep it out of state for a minimum of 90 days, you'll pay no state sales tax.
posted by Chuck Woodbury at
9/05/2007 04:53:00 PM
5 Comments:
Amazing how our elected officials who supposedly represent us act for their own personal gain. "If you can afford the toys then pay the price of owning the toy". Let's face it most of us take advantage of the second home provision of the tax law to deduct interest which in the long run say 5 years has a greater advantage then the no sales tax
Correct me if I'm wrong but by purchasing a high ticket item and apying the sales tax we had concession of a certain percentage of the sales tax that was deductible.
I pay taxes in Newport Beach, Ca.
By
Anonymous, at 1:11 PM, September 15, 2007
I donno 'bout the [proposed] new law, but the old one was more complicated than that. There used to be two options:
1. You had to BUY the rig, boat (OR plane; the Guvernator took advantage of it to avoid tax on a many-million-dollar personal jet he bought), OUTSIDE of Calif - or, at least, take ownership of it outside the state. THEN if you kept it entirely outside of CA for 90 days from purchase, you avoided the whompin'-monsterious sales tax.
2. If you [still] BOUGHT it outside of CA, but brought it into the state within 90 days of purchase, you could still avoid the tax-gouge ... by keeping it outside of CA by at least HALF of the first six months. A small hidden gotcha caught some number of folks - half of the first six months was a few days MORE than 90 days. (I was cautioned about that by a kindly Franchise Tax Board phone staffer! :-)
--jim-who-did-it
By
Jim, at 2:57 PM, September 15, 2007
I donno 'bout the [proposed] new law, but the old one was more complicated than that. There used to be two options:
1. You had to BUY the rig OUTSIDE of Calif, or boat or plane (e.g. the Guvernator thus-dodged tax on a many-million-dollar personal jet he bought) - or, at least, take ownership of it outside the state. THEN if you kept it entirely outside of CA for 90 days from purchase, you avoided the whompin'-monstrous sales tax.
Or else ...
2. If you [still] BOUGHT it outside of CA, but brought it into the state within 90 days of purchase, you could still avoid the tax-gouge ... by keeping it outside of CA by at least HALF of the first six months. A small hidden gotcha caught some number of folks - half of the first six months was a few days MORE than 90 days. (I was cautioned about that by a kindly Franchise Tax Board phone staffer! :-)
Either way, you had to buy it and acquire ownership of it while it was OUTSIDE of Calif.
--jim-who-did-it
By
Jim, at 3:01 PM, September 15, 2007
About the issue of whether this "tax break" is fair:
For most (but not all) owners of larger boats ("yachts") - apparently including the bill's [Republican] author - and almost all aircraft, probably most Californians WOULD consider it [yet another] "tax break for the rich".
But it is often far-different for many (most?) who buy an RV or most house-boats (don't forget those "floating RV's!). In many cases, such folks don't have masses of excess loot. Many are even retiring and/or down-sizing from an empty-nest larger home, or even moving into a "land yacht" or house-boat as full-timers, tryin' to make smaller-income ends meet as well as enjoy their retirement years.
For them, whacking their purchase of a larger RV (that might even be their new home!) or house-boat with the state's huge sale-tax gouge IS unfair and unreasonable.
--two-sides-to-see-jim :-)
By
Jim, at 3:15 PM, September 15, 2007
One other hidden gotcha about this issue:
If you're thinking of moving to Washington State (perhaps hoping to retire there on your limited income), WATCH OUT!!!
WA doesn't have an income tax (presumably Bill Gates won't allow it :-). But they have a MONUMENTAL sales tax - even worse than CA. It varies somewhat by city and county, but for instance, Seattle demands 8.8% tax - on sales AND (UNlike Calif) on various types of services (e.g. construction labor, gardening services), and extracts a 9.3% ransom from those who dare patronize Seattle restaurants or bars.
Washingtonians consider 8.4% - on sales AND various services - to be a "low" tax!
And they apply these same tax gouges to sales of high-ticket items such a as RV's (and boats and planes).
But it gets worse:
If you move into Wash State from some other state, already owning an RV (or boat or plane) and want to (are required to) license it in WA, they demand full "sales" tax on it!
Even if you bought it YEARS earlier, in some other state, as a resident of some other state!
Ahhh, but they only screw owners of RV's, boats and planes this way; not car-owners. (I.e., they only excessively gouge minorities who don't have the political clout to defend themselves.)
They do allow credit for any [lower!] sales tax paid in some other state, if you still have evidence of payment. And since you're need keep tax records for only seven years, they waive this special tax-gouge on RV's, boats and planes owned out-of-state for more'n seven years.
BUT, if you come from any of the several states - such as Oregon - that doesn't have any sales tax. THEN, Wash State demands this "sales" tax, no matter HOW MANY years or decades you owned your RV (or boat or plane) while residing elsewhere.
That is - not only does Wash State want to extract monumental sales taxes RV owners (and others) - they also want to thus PUNISH anyone who dared live previously, in a state that did NOT impose sales taxes!
[Note regading the issue of "fairness": Sales taxes always take the largest portion of income from those who have the lowest incomes. By definition, that is "regressive taxation."]
By
Jim, at 3:57 PM, September 15, 2007
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