How you title and register a yacht is one of the most important decisions in a purchase, and one of the most often overlooked. It affects how the yacht can be financed, how ownership is protected, where the yacht can be kept without additional tax and how smoothly it can be sold later.

Yacht registration in the USA works on two levels. At the federal level, many yachts are documented with the United States Coast Guard. At the state level, almost every yacht must also be registered, and often titled, in the state where it is principally used, and sales or use tax usually follows from that. The two systems overlap, and the rules vary considerably from state to state.

This guide is written for US citizens and residents. It explains Coast Guard documentation, state titling, how sales and use taxes apply, why Florida is so attractive to yacht owners and how owners commonly structure ownership. If you are a non-US owner, or you are looking at a foreign-flagged yacht, our companion guide to yacht registration international covers foreign flags, cruising licenses and the “not for sale to US residents” restriction.

Registration and tax rules change, and every owner’s circumstances are different. This article provides general information only. Please confirm your options with a documentation specialist, maritime attorney or tax adviser before closing.

Coast Guard Documentation

What Documentation Is

A Certificate of Documentation, issued by the Coast Guard’s National Vessel Documentation Center, is a form of national registration. For a yacht used for pleasure, it carries a recreational endorsement. Documentation is optional for recreational vessels, but it is available only to vessels of at least five net tons, which in practice usually means boats of roughly 25 feet and up, depending on the hull.

A documented yacht is identified by its name and hailing port, which must be marked on the hull, and by an official number permanently marked inside the hull. The hailing port can be any place in the United States the owner chooses.

Why Owners and Lenders Prefer It

Financing. Most marine lenders require documentation for larger yachts, because it allows them to record a preferred ship mortgage against the vessel. That gives the lender a clear, federally recognized security interest and the ability to recover the yacht in the event of default. If you plan to finance, expect documentation to be a condition of the loan. Our guide on how to finance a yacht covers the lending side.

International recognition. A documented yacht sails under the US flag. If something goes wrong while cruising abroad, the yacht is recognized as a US vessel, which gives the owner a clearer basis for assistance. In effect, a documented yacht becomes a small piece of the United States.

Clear ownership history. Ownership is transferred using Coast Guard bills of sale, and the Coast Guard records the change. Mortgages and other recorded instruments appear on the vessel’s abstract of title, which buyers and lenders can check before closing.

Citizenship Requirements

Only US citizens can document a vessel. When a yacht is owned through a company, that company must meet the Coast Guard’s citizenship rules. For a corporation holding a recreational endorsement, for example, it must be incorporated in the United States, its chief executive officer and the chairman of its board must be US citizens, and non-citizen directors must be no more than a minority of a quorum. The citizenship regulation for corporations sets out the detail, and other rules apply to partnerships and other entities.

Renewal

Documentation must be renewed to remain valid. Since late 2023, owners of recreational vessels can choose a certificate valid for one to five years, rather than renewing every year.

State Titling and Registration

Titling a Yacht Through the State

Some owners title the yacht with their state instead of documenting it. In Florida this is common and straightforward, particularly for boats under about 40 feet that are not financed by a major lender. On sale, the seller signs over the original title, a bill of sale is completed and the paperwork is processed through the county tax collector’s office.

State titling is simpler, but it offers less protection than documentation when it comes to tracing liens. Recorded state liens normally appear on the title, but maritime liens, such as unpaid bills for repairs, fuel or dockage, can attach to a vessel without being recorded anywhere. This is one reason a professional title and lien search is so valuable whichever system you use.

State Registration Applies Either Way

Documentation does not replace state registration. Most states, including Florida, require a documented yacht that is principally used in the state to be registered there, even though it does not receive a state title or display state registration numbers. Registration is renewed with a fee, much like a car, and a decal is issued for display.

Sales Tax and Use Tax

How the Two Taxes Work

Whatever the form of title, most states expect sales or use tax to be paid once on a yacht kept and used in that state. Sales tax normally applies when a yacht is sold within the state. Use tax applies when a yacht bought elsewhere, without equivalent tax being paid, is brought into the state for use. Rates vary widely, from nothing to more than 7 percent, and many states give credit for tax already paid to another state.

Most states also allow a visiting period before a yacht becomes subject to use tax, and many offer a sales tax exemption when an out-of-state buyer removes the yacht promptly and registers it in another state, with proof of both. Some states add annual taxes. South Carolina, for example, applies a county property tax to boats owned by residents.

States Watch Closely

States know that owners move yachts to reduce tax, and some enforce their rules aggressively, with substantial penalties. A familiar example on the East Coast: some Maryland residents register their yachts in Delaware, which has no sales tax, then must keep a careful eye on how long the yacht stays in Maryland waters, since Maryland imposes its own vessel excise tax once the visiting period is exceeded. Plans like this can work within the rules, but they need careful record-keeping and professional advice.

Trade-Ins

In Florida, when a yacht is traded in as part of the purchase through a registered dealer or broker, the trade-in value can be deducted from the price, and tax is charged only on the difference. This can recapture much of the tax value of the yacht you are trading. Not every state allows it, so check before structuring a trade.

Why Florida Is So Attractive to Yacht Owners

Florida is a favorite home port for its weather, its cruising grounds and the depth of its marine services, and its tax rules are among the most favorable in the country for larger yachts.

The $18,000 cap. Florida’s 6 percent sales and use tax applies, but the total state tax on a boat is capped at $18,000, which is reached at a price of $300,000. A $3 million yacht pays the same maximum as a $300,000 one. County surtax may also apply, but only to the first $5,000 of the price.

Nonresident buyers. A nonresident who buys through a registered Florida dealer or broker can usually claim an exemption by signing an affidavit and removing the yacht from the state. For yachts of five net tons or more, decals allow the yacht to remain in Florida waters for up to 90 days, extendable to 180 days. Smaller boats generally must leave within 10 days, or within 20 days after repairs at a registered facility. Timing matters on return, as Florida generally applies use tax to a boat brought into the state within six months of purchase.

Visiting and repairs. A boat on which Florida tax has not been paid can generally stay up to 20 days in a calendar year at a registered marina, and time spent at a registered repair facility does not count toward that limit.

The Florida Department of Revenue’s guide to boat sales and use tax sets out the rules and exemptions. They are detailed and the penalties for getting them wrong are significant, so confirm the current position with a tax professional before relying on any exemption.