Boat Registration and Taxes

We feel it is important that our clients understand the laws in the state of Maryland regarding the sales tax collected on vessels used in Maryland waters.

The state of Maryland collects 5% of the selling price on any boat sold that will be used in Maryland waters.  This applies to Maryland titled vessels as well as Federally Documented Vessels.  Taxes are paid to the state where the vessel is used, not where you live. The State of Maryland definitions are as follows:

“State of Principal Use” – means the state on whose waters a vessel is used or to be used most during a calendar year (January 1 through December 31).

“Use” means to operate, navigate, or employ a vessel.  A vessel is in use whenever it is upon the water, whether it is moving, anchored or tied up to any manner of dock or buoy.  A vessel is also in use if it kept in any structure in readiness for use.

A vessel is not deemed used on the waters of the State if the vessel is used for 90 days or less of a calendar year.

A vessel is not considered to be in use for any period of time that it is held for maintenance or repair for 30 consecutive days or more.  A vessel is deemed to be held for maintenance or repair if:

A.       The maintenance or repair work is provided in exchange for compensation

B.      The maintenance or repair work is performed pursuant to a schedule preestablished with one or more marine contractors; and

C.      The total cost of the maintenance or repair work is at least two times the reasonable current market cost of docking or storing the vessel.

DNR works closely with marinas and monitors on a regular basis vessels that are in the water.  If they don’t see registration stickers or MD numbers on your boat, it will be monitored and you will be billed for taxes due after they have ascertained it has been there for over 90 days. 

Remember, taxes are paid to the state where the vessel is used not where you live. 

If you have any questions concerning taxes or state of principal use, please contact us at Integrity Yacht Sales and we’ll be happy to walk you through the process.

Vicki Rasmussen, CPYB

Integrity Yacht Sales

301-261-5775