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Are consignment sales considered private party?

Brobee

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Good morning everyone. I’m looking to purchase a new to me used boat for this season. I found one being offered on consignment through a dealership. One of the main draws of buying a used boat was the lack of AZ sales tax when purchasing from a private party. I own a home in LHC and it will be stored there and only used locally.

The boat is currently registered in AZ but is being offered at a CA dealership. My question is am I going to have to pay sales tax on this? On a 70k+ boat that’s no small chunk of change. The dealership has to run my offer past the boat owner so I feel like I’m buying it from him but the dealership isn’t familiar with AZ taxes so they’re no help.

Thanks for your help.


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Taboma

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Good morning everyone. I’m looking to purchase a new to me used boat for this season. I found one being offered on consignment through a dealership. One of the main draws of buying a used boat was the lack of AZ sales tax when purchasing from a private party. I own a home in LHC and it will be stored there and only used locally.

The boat is currently registered in AZ but is being offered at a CA dealership. My question is am I going to have to pay sales tax on this? On a 70k+ boat that’s no small chunk of change. The dealership has to run my offer past the boat owner so I feel like I’m buying it from him but the dealership isn’t familiar with AZ taxes so they’re no help.

Thanks for your help.


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I'm guessing since you stated "Dealership", therefore I believe it's subject to being taxed.
 

Albert

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It depends if thet have a brokage lic I think. When I sold mine it was a private transaction from the dealer they just collected a fee.
 

gqchris

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When i worked at LBYS, all deals, even consignments were ran thru the same process as any other transaction. That's why you buy from a broker, to receive the protections such as escrow and title security etc. We would also provide the DMV transfers etc.

So yes, you will have to pay tax, lic and fees.
 

02HoWaRd26

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Tell them to bring the offer to the seller that you’ll buy direct from the seller not dealer but they still collect their fee from the seller....
 

sirbob

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Speaking of consignment deals.

What is the typical fee to the seller for doing this - 10%, vary by amount of sale, other ?
 

Albert

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I dont think its a % maybe some are but mine was just a flat fee and it was worth it . He got me about 10k more no joke
 

530RL

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Your question is technically about process.

Some places consign the boat (more specifically sign an agreement to sell for a fee or spread without an obligation to buy), then upon a sale happening simultaneously take it into the dealership inventory and then sell it to you. Sort of like double escrowing a piece of real estate. In this case you technically purchased it from the dealer and it is subject to sales tax as the seller to you, the dealership, is in the business of selling boats.

Some places contract with an "agent" to help sell the boat and then the transaction is for you to buy the boat from the existing seller and the existing seller pays a fee to the "agent". In this case, you have purchased the boat from a private party and the private party paid a fee to the broker. In this case you technically purchased it from the private party and assuming the private party is not in the business of selling boats, it would fall under the casual sale exemption. However, be careful in the sense that most states consider "consignment" agreements with a licensed dealer as a retail sale subject to sales tax.

There are all sorts of rules and laws about these types of transaction whether it be cars, boats or planes as well as there are all sorts of arguments on how you can get screwed either way. But in any event, if you want to have the "casual sale" exemption from sales tax you have to technically purchase it from a private party not in the trade or business versus from the dealer.

Lastly, as we all know from other boat dealers, make sure the seller actually has free and clear title to both the boat and the trailer as that is a far greater financial risk than possible sales tax.

Hope this helps you figure out a way to structure the transaction to your advantage, although if it has paperwork with a dealer name on it and/or a dealer handles the licensing or registration, I suspect you will be subject to some risk that the tax man may come knock on your door. :(
 
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sirbob

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I dont think its a % maybe some are but mine was just a flat fee and it was worth it . He got me about 10k more no joke
Your question is technically about process.

Some places consign the boat (more specifically sign an agreement to sell for a fee or spread without an obligation to buy), then upon a sale happening simultaneously take it into the dealership inventory and then sell it to you. Sort of like double escrowing a piece of real estate. In this case you technically purchased it from the dealer and it is subject to sales tax as the seller to you, the dealership, is in the business of selling boats.

Some places contract with an "agent" to help sell the boat and then the transaction is for you to buy the boat from the existing seller and the existing seller pays a fee to the "agent". In this case, you have purchased the boat from a private party and the private party paid a fee to the broker. In this case you technically purchased it from the private party and assuming the private party is not in the business of selling boats, it would fall under the casual sale exemption. However, be careful in the sense that most states consider "consignment" agreements with a licensed dealer as a retail sale subject to sales tax.

There are all sorts of rules and laws about these types of transaction whether it be cars, boats or planes as well as there are all sorts of arguments on how you can get screwed either way. But in any event, if you want to have the "casual sale" exemption from sales tax you have to technically purchase it from a private party not in the trade or business versus from the dealer.

Lastly, as we all know from other boat dealers, make sure the seller actually has free and clear title to both the boat and the trailer as that is a far greater financial risk than possible sales tax.

Hope this helps you figure out a way to structure the transaction to your advantage, although if it has paperwork with a dealer name on it and/or a dealer handles the licensing or registration, I suspect you will be subject to some risk that the tax man may come knock on your door. :(


So in the end - for a boat like the OG is talking about ($70k) how much would somebody expect to pay in fees or commission?
 

Albert

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Thats negotiated with the dealer . Like on mine, the dealer did a detail on the boat at a discounted rate for me of $200 so I paid for this before the sale . There are dealers on here and I dont thinknit would be fair to post what was paid
 

RiverDave

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Tell them to bring the offer to the seller that you’ll buy direct from the seller not dealer but they still collect their fee from the seller....

Unless you're friends with the owner of the dealership or something, I'd be surprised if most would do this.


Speaking of consignment deals.

What is the typical fee to the seller for doing this - 10%, vary by amount of sale, other ?

It varies on the services rendered and price of the boat. I.E. Is the shop storing the boat? Is the owner storing the boat and the shop showing it at location etc.. As well the price comes into play, when you get into the big time baller boats most aren't going to pay a full 10% pop on a million dollar rig etc..

RD
 

ONE-A-DAY

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So in the end - for a boat like the OG is talking about ($70k) how much would somebody expect to pay in fees or commission?
7% is the norm, but everything is negotiable. When I sell boats with a broker I tell them my bottom line, they can keep whatever they get above that number.
 

sirbob

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Unless you're friends with the owner of the dealership or something, I'd be surprised if most would do this.




It varies on the services rendered and price of the boat. I.E. Is the shop storing the boat? Is the owner storing the boat and the shop showing it at location etc.. As well the price comes into play, when you get into the big time baller boats most aren't going to pay a full 10% pop on a million dollar rig etc..

RD


So that begs the question again what is it going to cost a guy to consign a 70k boat?

If stored on site / not stored on site.

I can not tell you how many times I have had a conversation with people about this topic and either nobody knows or won't tell. And before somebody says "why don't you call a broker / dealer / consignor etc - because I hate wasting peoples time on dealing with me when I'm not going to list it now and also I don't want to small talk somebody for while on the phone.

Of all the places I see that advertise - we do consignments - they never tell you how much its going to cost. Determine the price schedule and put it on your web site. How hard can that be?
 
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sirbob

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7% is the norm, but everything is negotiable. When I sell boats with a broker I tell them my bottom line, they can keep whatever they get above that number.


While I was typing .... THANKS!


Sorry to derail the thread - back to sales tax questions:)
 
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rivrbrat

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Unless something has changed.

Have Boat delivered to you AZ no tax............. Dealer can not collect tax in AZ unless he is licensed to do so.
 

Justfishing

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Unless something has changed.

Have Boat delivered to you AZ no tax............. Dealer can not collect tax in AZ unless he is licensed to do so.
Az law is if you buy a car used from a dealer you pay sales tax. That same car if bought from a private seller you would not pay sales tax. I take it that this applies to boats.

Since these are titled and have to be registered it is easy for states to make sales tax collected at time of registration. This you can buy a car in any state and not pay sales tax until it is registered.
 

ONE-A-DAY

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Az law is if you buy a car used from a dealer you pay sales tax. That same car if bought from a private seller you would not pay sales tax. I take it that this applies to boats.

Since these are titled and have to be registered it is easy for states to make sales tax collected at time of registration. This you can buy a car in any state and not pay sales tax until it is registered.

Boats dont have titles in AZ.
 

ONE-A-DAY

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Az law is if you buy a car used from a dealer you pay sales tax. That same car if bought from a private seller you would not pay sales tax. I take it that this applies to boats.

Since these are titled and have to be registered it is easy for states to make sales tax collected at time of registration. This you can buy a car in any state and not pay sales tax until it is registered.

Private party purchase of a car in Arizona they dont charge tax but they still charge a fee, its pretty significant, Im not sure how they calculate it but is a percentage of the purchase price when new that goes down with each year of age.
 

steak&lobster

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Private party purchase of a car in Arizona they dont charge tax but they still charge a fee, its pretty significant, Im not sure how they calculate it but is a percentage of the purchase price when new that goes down with each year of age.

Note that the value of your vehicle is calculated as 60% of the original manufacturer's retail price, and that total will be lowered by 16.25% at every registration renewal. For each $100 of the vehicle's value, you will be assessed: New vehicles: $2.80. Used vehicles: $2.89.
 

LargeOrangeFont

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Unless you're friends with the owner of the dealership or something, I'd be surprised if most would do this.



RD

That is exactly how I bought my boat from a popular consignor. Many of them do this. Wrote the owner a check, and the consignor a check. Deal was a private party sale, no taxes paid in AZ.

Had I purchased straight through the consignor, I would have had to pay sales tax, as they are a dealer.
 

rivrbrat

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Az law is if you buy a car used from a dealer you pay sales tax. That same car if bought from a private seller you would not pay sales tax. I take it that this applies to boats. Yes.

Since these are titled and have to be registered it is easy for states to make sales tax collected at time of registration. This you can buy a car in any state and not pay sales tax until it is registered.
If the Vehicle is delivered out of state there should be no tax or registration collected.

Do not let anyone not licensed in the state of AZ collect any tax from you...... It's a scam AZ is very good about sending that money back to the payer. not you.
I had a lady at the AZ tax board tell me that they get it all the time. Out of state company's collecting taxes knowing the state would send it back to them allowing them to screw the purchaser out of that money.
 

mjc

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When I bought my used boat the only thing that mattered was name the title was in. If the title still has only the sellers name on it and nothing by the dealer then it can be considered a used with no tax in AZ.
 

LargeOrangeFont

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2FF to the courtesy phone please.


There is no magic advice he is going to impart.

If you buy a used car, boat, OHV or trailer anywhere from a private party and register it in AZ, there is no sales tax. If a consigner will “get out of the way” and the deal is not done on their paper, it is a private party sale.
 

Brobee

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So as an update, the dealership and seller agreed to proceed as a private party sale with the dealer only acting as a facilitator. I assume the seller will just pay the dealer their portion and all will be good. This will save me a bunch in sales tax. Now it’s about finding the best loan.
Thanks for all the responses and insights. You guys are awesome.


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j21black

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When I bought my current boat in 14, I purchased from a private party out of state. Paid no sales tax. A few years later the state sent me a bill to collect sales tax plus interest. We got past it and they sent me a letter stating the matter was settled, but it was a PIA. This was in NC. I did the deal through a title company, so they were able to help out a few times. Local office told me I had to pay the sales tax on the total purchased to register the trailer. Called title company and they fixed that for me as well. $500 well spent.

In Indiana years ago I purchased a motorcycle new from a dealer out of state. I paid sales tax when I registered it with the state of Indiana. Several years pass and I get a letter from the State wanting the same thing, tax plus interest. Luckly I still had my the documents from when I first purchased it. Lady called me several times, I sent the paperwork and "they never got it" My stepmom worked for a lawfirm and sent them a copy certified mail. We knew they had it. She called a few weeks later and I told her to take me to court, and expect a counter suit, any contact from here forward needs to be handled through my attorneys office at XXX number.

10 minutes later my stepmom calls me and it has all been settled.

Again a story about Indiana DMV - Purchased 4 wheeler in 06, billed as farm use, so no sales tax. We owned a farm. We are now living in NC, and just do an annual credit check, see the state of Indiana has done something, maybe a lien can't recall specifically, and had issued a warrant for my arrest. We had no idea what it was for, made a few phone calls and after screaming at the guy on the phone at the DMV in Indy for a couple of days they cleared the record.

IMO - Fuck all DMV's - Every FKNING one of them...

Sales tax was paid to some state when it was new, that should be the end of it. Double Dipping asshats..
 

GETBOATS

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It is not legal in Ca. to represent/sell a boat as defined between 16 Ft. and 300 tons for boats not in your name, this includes trade ins and brokerage/consignment sales. Dealers do it all the time and are in violation of law. If sale is completed in the state of Ca. sales tax would apply. If new owner takes possession out of the state of Ca. and Boat is delivered by dealer or common carrier, it is not a taxable event. Some good responses here, some just interjecting ides that will eventually put some one on the short end of the stick. Think about it the state puts boats from 16 feet to 300 tons in the same category, hahahaha
 

beertruck

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Speaking of consignment deals.

What is the typical fee to the seller for doing this - 10%, vary by amount of sale, other ?
If your dealing with Tim McDonald the fee is 100%
 
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