Watercraft Property Tax Changes

For years, property taxes on boats and outboard engines have been calculated a year in arrears. This means that property tax bills are generated in October, only if you owned the boat on January 1st of that year.

While delaying a tax bill seems like a good thing, this practice can create nightmares for new owners when a boat changes hands.

Once a boat sells, the previous owner feels they do not owe the tax bill since they sold their boat.

However, the previous owner is responsible for that bill, even though the boat belongs to someone else now. When it comes time to renew the registration, back taxes are due.

Getting the previous owner to pay up is difficult, leaving the new owner to pay someone else’s tax obligation.

This situation is further compounded by the fact that registration runs for up to three years, with the potential for back taxes to add up before the new owner realizes it.

Well help is on the way. SC House bill H. 4715 was signed into law in May 2018 which should help the situation tremendously.

There are several pieces to the legislation.

Beginning in 2020, property taxes will be paid for the year ahead, with tax due dates coinciding with the month that the registration decal expires.

Furthermore, registration decals will only be good for one year as opposed to three years currently available.

Any changes in ownership on any boat or outboard engine will be required to be accompanied by a paid tax receipt for the year ahead.

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In reading the bill, it seems very similar to the way property taxes and registration works with vehicles.

While the new system begins 1/1/2020, it will take up to three more years to work its way through the system.

In the meantime, if you plan to purchase a used boat, check with SCDNR to be sure there is no flag on the boat or outboard for unpaid taxes.

However, be advised. Even if there is no flag now, you might still get caught paying back taxes due to the flaws in the current system.

At Duncan’s Boats, we check and double check every boat we trade or broker and still, we have to pay back taxes on several boats each year. Also, be sure to notify DNR of any change in ownership.

Hopefully, the new system will be an easy transition and will resolve issues relative to owed back taxes.

You can check out the details of the bill at: https://www.scstatehouse.gov/sess122_2017-2018/bills/4715.htm

Jim Duncan / Duncan’s Boats

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