Taxes on a Used Boat?!?

I found a used boat I am interested in purchasing and received the financing from my bank for around 50% of the purchase price. The boat is located in WI, and I am located in MN.

The bank contacted me today asking for an itemized (boat vs. trailer) allotment of value from the seller. I was also told I will have to pay sales tax on the entire rig (well over $1000), despite buying from a private seller who must have originally paid a sales tax.

I was under the impression that I would just be paying sales tax on the trailer? Also, is there a way around the total tax? I read somewhere where if the deal was arranged to take place in MN, that there would then be no reason to pay the sales tax except on the trailer. Other sources have said there should not be any sales tax on anything but the trailer…regardless of where the transaction takes place.

Thanks for your help!!

I bought a boat from WI a few years ago, and only paid sales tax on the trailer when I registered it. Maybe if you go through a bank for a loan then the state gets their grubby hands on more of your money.

Does your state have a luxury tax? You might not be done with taxes yet. In CA, boats over a certain value are taxed on a yearly basis above and beyond registration. Also, a lot of states were losing so much tax revenue from people buying on the internet that laws have changed to collect sales tax no matter where the item was purchased.

Private party or dealership?
I bought a $16k cash boat 3 years ago from private party and only had tax on trailer.

The boat I bought a few years back in Minnesota was from a dealer but was on consignment from the private seller. Because the dealer did not own the boat but was only selling on behalf of the private seller…no sales tax on the boat, only the trailer.
SuperDave1959, no luxury tax here…yet!

Edit: The point here as Mark Bruzek is asking…if being sold by a dealer, yes there would be a sales tax on the boat.

If it from a private seller and being titled in MN there should be no sales tax.

Your bank may not aware of that fact, you should simply ask them.

Why in the world would the bank be telling you that you had to pay any of the taxes?
I’d find a new bank….the tax issue has nothing to do with anything……

chubby wrote:

If it from a private seller and being titled in MN there should be no sales tax.

Your bank may not aware of that fact, you should simply ask them.

Okay, I see now the OP said he was buying from a private seller. I wouldn’t think any need to ask the bank. Whether they know or not, they don’t need to know, or should care. The tax (if there is one?) would be the buyer’s responsibility anyway. Sounds like the bank would only be financing the 50% of the purchase price.

Check out credit unions for boat loans, I even had a bank recommend that when I financed my first private party purchased boat.

The boat is from a private seller.

FishBlood&RiverMud wrote:

Check out credit unions for boat loans, I even had a bank recommend that when I financed my first private party purchased boat.

I apologize, the financing is actually through a Credit Union…not a bank

The representative told me that I’d be paying a sales tax on the entire value of both the boat and trailer (from a private seller). The private seller is located in Wisconsin, as is the Credit Union and I am a MN resident…if that makes a difference?

buckybadger wrote:

The private seller is located in Wisconsin, as is the Credit Union…if that makes a difference?

Could be that Wisconsin taxation is different.

I bought a boat from South Dakota and registered in MN. Taxes mattered for where I registered and from whom. didn’t matter where I purchased.

On the pain in the butt side, the gal at the DMV didn’t know how it worked either. I bought from a dealer so I owed sales tax on the boat. She didn’t charge me, despite my insisting, now I have to hassle to get MN DNR the money.

I learned something today.

After contacting 2 credit unions and one bank this afternoon, it is in-fact correct that any person purchasing a used boat that was previously titled in the state of WI would be subject to a full sales tax. If the boat in this instance would have been titled in MN previously, then I’d only owe the sales tax on the trailer.

It’s unfortunate, but all 3 lenders had the exact same response. They also stated that the financing has nothing to do with it. A person paying fully in cash is legally obligated to pay the tax in this scenario also. ANY Minnesota resident who purchases a boat titled in WI previously is subject to the full value tax, and will be held responsible with a penalty added to the overdue taxes. The lender who specializes in marine financing also mentioned that the MN Dept. of Revenue has come a long ways in tracking these transactions (even with cash) and shares a lot of data with the DNR. This particular lender also said that when it comes time to renew boat registration, that more and more people are being put on the hook for the old taxes they missed out on as a result of this specific scenario. I cannot imagine the shock on a boat owner’s face when they are told they owe taxes on a $30k+ rig if they purchased from out of state for cash and avoided the tax originally!!! Bad Deal!

Moral of the story…don’t fall in-love with any used boat from Wisconsin! I’m never one to encourage fraud/evasion, but I am assuming that if this transaction was done solely with cash that the seller could likely “adjust” the asking price accordingly for what goes on record with the bill of sale. Once the bank was involved, the asking price is set in-stone.

mojogunter wrote:

I bought a boat from WI a few years ago, and only paid sales tax on the trailer when I registered it. Maybe if you go through a bank for a loan then the state gets their grubby hands on more of your money.

Not too late to delete your post here…never know if anyone nosing around here might work for the state DOR.