Looking to buy

[Rex Robinson]

I'm looking to buy a used 1998 Baja hammer that doesn't have a motor or lower unit I live in Illinois and the boat is in Kentucky. I found out that I have to pay taxes on the fair market value of the boat not the price me and the seller have negotiated since it has no motor or lower unit. Is there anyway I can get it to where I pay only taxes on what I pay for the boat rather than the taxes on the fair market value of it? Any help is greatly appreciated.

 

[roscoe]

Yes, move out of Illinois.

Nephew bought a car in similar shape, no engine or trans.
Proceeded to put in an engine, trans, brakes and tires.
State of Illinois wanted their money, and didn't believe him when he told them he had just bought the rolling chassis.
He was supposed to prove it, 4 months after the fact.
He ended up paying taxes on something like $10k more than he had purchased it for.

Good luck getting any info on the taxi due ahead of time either, as they are so far behind, and so in debt, and they don't care.

You might want to look into registering it in another state, especially if you are near the state line, or plan on using it in another state most of the time.
Many IL residents register and keep their boats here in WI, perfectly legal.

 

[Rex Robinson]

Thanks. I live in southern Illinois close to the Indiana line I may look at having it registered there.

 

[jkust]

So by whom and how is the fair market calculated under the Illinois rules. Far market value for a hull would be practically nothing but by what measuring stick would they come up with a number?

 

[oldjeep]

So by whom and how is the fair market calculated under the Illinois rules. Far market value for a hull would be practically nothing but by what measuring stick would they come up with a number?

Same way everyone else does it - Average NADA value

 

[Blind Date]

Far market value for a hull would be practically nothing but by what measuring stick would they come up with a number?

Agree. That hull with the motor and drive missing has no value. Realistically the trailer it is sitting on is worth more empty than with that hull on it.

 

[roscoe]

Yes, move out of Illinois.

Nephew bought a car in similar shape, no engine or trans.
Proceeded to put in an engine, trans, brakes and tires.
State of Illinois wanted their money, and didn't believe him when he told them he had just bought the rolling chassis.
He was supposed to prove it, 4 months after the fact.
He ended up paying taxes on something like $10k more than he had purchased it for.

Good luck getting any info on the taxi due ahead of time either, as they are so far behind, and so in debt, and they don't care.

You might want to look into registering it in another state, especially if you are near the state line, or plan on using it in another state most of the time.
Many IL residents register and keep their boats here in WI, perfectly legal.

************************************************

Just emailed nephew, he said in the end, he paid tax on $7300 more than he paid for the car.
And a year later, he sold the car and took a job over seas.


The tax is determined by the year of the vehicle, unless the value is over $15k, then it goes by fair market value.

http://tax.illinois.gov/taxforms/sales/vehicleusetax/rut-50-instr.pdf



http://tax.illinois.gov/publications/sales/sts-76.pdf Fair market value is the price at which property would change hands between a willing buyer and seller, neither under compulsion to buy or sell and both having reasonable knowledge of relevant facts. If the department questions the amount of the fair market value, we have the authority to make the fair market value determination. In determining the fair market value, the department considers such factors as the year, make, model, and identification number.




Then don't forget to add the use tax, county tax, and municipal tax in some areas of the state.

 

[ajgraz]

Wow, another reason to dislike I/O's. NADA does not let you specify "no motor and/or no outdrive" for valuation on a sterndrive, the way it allows that for an OB-powered hull.

It does seem like the lack of propulsion should be considered a "relevant fact" though.


EDIT: looking at the RUT-50 form instructions you linked though, looks to me like you can choose to enter actual purchase price, just attach a bill of sale as proof. Only if you don't know the purchase price is fair market value required. And in any case, according to a quick NADA valuation (assuming no super high-dollar fancy options) FMV looks to be <$15k, and the boat is >11 yrs old, so it looks like you'll only owe $25? (Not counting any other fees and taxes roscoe mentioned)

Did someone at IL DMV tell you you'd owe more? Looks to me like they're wrong.

 

[brian4321]

I haven't found a way around it... On the form it says" 6.25% of the purchase price, or fair market value, whichever is greatest.....A friend of mine paid @ $8,000 for a boat, but he had the seller put $1,500 on the bill of sale. . a few months later the DMV called wanting to tax him on the market value of the boat.. he had them call the seller which told them the boat was not in running condition and needed a lot of work which is why he sold it so cheap... The DMV ended up dropping the case and he got away with it, but I wouldn't advise doing it, because if they catch you you'll have to pay the full tax plus interest plus a fine for tax evasion... In your case I would have them contact the seller so he could explain why it was so cheap

 

[jkust]

Interesting...my state oddly is liberal on the sales tax on used boats purchased from private parties or brokerages (sales tax is paid on dealer sold used and new) though it is about 3rd or so in most punishing states all around for taxes in general. There isn't sales tax on any used boat purchased from a private party or brokerage but there is on the trailer though they accept whatever value you give to the trailer. A lot of times people will advertise their boat/trailer combo as boat is x dollars and you get a free trailer with it. Our sales tax hovers around 8% depending on your county can be a bit less.

 

[Rex Robinson]

Thanks everyone for the information. I contacted the IRS today and he told me as long as I had a bill of sale with at least one witness signature,the seller and the buyer and the purchase price and the VIN# they would Honor that bill of sale no questions asked, but I'm sure the state of Illinois will try to go back on me so I put all contact info of the three parties on the bill of sell.

 

[Old Ironmaker]

Yes, move out of Illinois.

Nephew bought a car in similar shape, no engine or trans.
Proceeded to put in an engine, trans, brakes and tires.
State of Illinois wanted their money, and didn't believe him when he told them he had just bought the rolling chassis.
He was supposed to prove it, 4 months after the fact.
He ended up paying taxes on something like $10k more than he had purchased it for.

Good luck getting any info on the taxi due ahead of time either, as they are so far behind, and so in debt, and they don't care.

You might want to look into registering it in another state, especially if you are near the state line, or plan on using it in another state most of the time.
Many IL residents register and keep their boats here in WI, perfectly legal.

At least they were willing to work with him. Not here in Ontario. If you buy anything that needs registration from an Altima to a Zephyr they will be sure to get their pound of flesh. Boats are Federally registered. There are 3 categories for determining value here, actually 4 including a receipt if it is more $$ than the govs. Blue Book. Good, fair or poor condition. Poor does not take into consideration the vehicle can be in 4 different locations. It is an average minus depreciation of all of the same vehicles sold in Ont. There should be a freekin' bonus paid to buyers that will keep stuff out of landfill. Maybe some day when the eco freindly Millennials govern. Only boat trailers are registered by the Provinces separate from the boat.

The Feds register your boat. They are much more lenient on pleasure boats than Provinces are for vehicles. In fact you don't even know what the taxes are when you register. They may or may not send you an invoice sometime in the future. I received one 2 years after buying and it worked out to 7% of the boat selling price, trailers need a separate invoice for the Province. If you don't you pay taxes twice and that happens all the time. As a country we have a high percentage of owners that never bother re registering their boats. It's getting more prevalent to register because some are actually insuring their rides. We need a Safe Boater card here for pleasure boaters, and a written test to get it. It is a joke in many ways but better than nothing. There are 6 boaters cards out there for every registered boat here and when you rent a boat you don't need a card!!??. Of the 10 guys I know personally with boats here on the lake 3 are registered and insured. 1 is a 32 footer worth a few bucks, no insurance. The same guys would never think about putting an old beater on the road without a million in liability at least. People sure are strange.

 

[Old Ironmaker]

^ sorry that doesn't help you much other than to point out it could be worse.