Selling your boat can be an emotional experience; after all, you have many happy memories from days spent with friends and family and it can be hard to say goodbye. Plus you may have reasons to sell unrelated to the boat that are taking precedence and adding urgency to the effort. Whatever the case may be, getting yourself organized can make the whole experience less stressful, and we find it’s best to get your paperwork in order before listing the boat for sale so you’re ready as soon as a buyer shows keen interest.
There are several things to do before you sell your boat, and we recommend starting by reading through our in-depth guide to selling your boat first, which will lead you to preparing your boat for sale and making it look its absolute best. You’ll also need to decide where to list your boat for sale, write an eye-catching listing, take good photos and videos, and then arrange viewings.
If you’re working with a yacht broker to sell a larger boat, they will handle some of this advance work and much of the paperwork. If not, it’s important to have your paperwork ready and waiting when buyers begin to show interest. The last thing you or they want is for the sale to be held up because there’s missing paperwork, plus it’s well-known that a buyer can lose confidence in a purchase if you can’t quickly produce the paperwork they request. Paperwork and taxes will vary depending on the country and, in the United States, from state to state, as well, but here we take a look at the types of documents and taxes you need to be aware of when selling your boat.
Getting your paperwork in order before listing the boat can make the whole selling experience less stressful and make you ready as soon as a buyer shows keen interest.
Paperwork for Selling a Boat
Boat Bill Of Sale: The Bill of Sale—also known as the Boat Purchase Agreement—is one of the most important documents you’ll need when selling your boat. It’s the transaction between you, the seller, and the buyer and legally transfers the ownership of the boat. The bill itself is a fairly simple document, and the specific requirements can vary between country and state, but will include a lot of important information that legally protects you once ownership has been transferred. While a Bill of Sale isn’t legally required in all states in the U.S., it’s always a good idea to have one anyway as evidence of the transaction. A Bill of Sale will include;
- A description of the boat including the hull identification number (HIN)*, brand, model, year manufactured, length, and any electronics or accessories that are included in the sale. The HIN should be permanently marked on the port side transom and match that on the Bill of Sale. If the boat has an outboard motor, it should be listed separately with its serial number.
- The purchase date
- The sale price
- The signature of both the seller and buyer
- The name, address and contact information of both buyer and seller
- The state registration number
- Trailer Vehicle Identification Number (VIN) if it’s being sold with the boat
You can create your own Bill of Sale, and there are many templates online to help you, or you can choose to use an attorney or yacht broker, especially if you’re selling a larger boat.
Boat Title: This is probably the most important document you’ll need as it offers legal proof of ownership. In the US, boat titles are issued by each state (although not all states require them), and whenever a boat is bought or sold a new one will be issued to the new owner. Even if you live somewhere where one isn’t legally required, it’s a good idea to get a boat title anyway as it makes it easier when selling it. A buyer will want that legal reassurance that the boat they’re buying is truly yours to sell.
Warranty Documentation: If your boat is still within its warranty period, this can be a huge selling point and it’s important that you can provide all the necessary documentation to the new owner. Check with the manufacturer that the warranty name can be changed first, and then provide the buyer with the warranty card so that can be done once they take official ownership of it. The Bill of Sale and registration documents that they will need to acquire will be the proof that they need to do so.
Used boats are usually bought on an “as seen” basis, and it’s up to the buyer to ensure they’ve done the checks they feel are necessary, such as a sea trial and survey. But if the boat isn’t within its manufacturer’s warranty period, as the seller, you could consider offering a warranty to ease their mind. It’s vital that you think clearly about what you’re offering and make sure it’s clearly written down to make it legal. This isn’t a common practice when selling a used boat if it’s a private sale, although boat dealers do sometimes offer a limited warranty.
Builder’s Certificate: If your boat is still fairly new, you might want to offer your seller the Builder’s Certificate from the vessel’s manufacturer for added peace of mind. It will detail information about the boat, the contact information of the builder, and also confirm your ownership.
Maintenance Records: Maintenance records are not generally an imperative, but it’s certainly good to have them, as it can be a big selling point and can add value to your boat. Buyers will feel reassured about the overall condition of the boat knowing that it’s had a regular and thoroughly documented maintenance schedule. Maintenance records will detail the condition of the boat, what work has been done, when, and by who. In general, the bigger the boat the more maintenance should have been completed on it, and it could include everything from engine servicing to when the electronics were updated or the bilge pumps serviced.
Trailer Title: If you’re selling a boat and including a trailer in the deal, you’ll need to be able to produce your trailer title. In most states in the US and many other countries, a trailer will require its own separate title, which you will need as proof of ownership. Your buyer will need to have that document so that they can get it registered in their own name.
Loan Repayment Documents: While it gets more complicated to sell a boat on which you are still repaying a loan, it’s still certainly possible. You’ll need to first check with your lender to ensure they agree to the sale, and then ensure any liens are released before the buyer takes ownership of the boat. This will be necessary for them to register the boat in their name. If you plan to use money from the sale to pay off the boat loan, then it’s a good idea to have loan statements to show your buyer so they are reassured that you will be able to cover the loan.
Invoice Receipt: Issuing an invoice on a used boat isn’t always necessary if you have a Bill of Sale, but it can be a good idea for extra confirmation of the transaction. It should include the boat model and VIN, and will be helpful when dealing with taxes.
Insurance Documentation and Cancel Listings: Don’t forget to cancel your insurance as soon as the boat is officially the new owner’s. You may be able to set this up in advance to cancel it on the day of sale. You’ll also want to make sure you cancel any boat listing advertisements you may have, so interested buyers don’t call.
When selling a larger boat with a yacht broker, they'll handle much of the advance work and paperwork. Otherwise, ensure your paperwork is ready when buyers express interest.
Taxes When Selling a Boat
In addition to the paperwork you need to arrange when selling a boat, it’s good to know what, if any, taxes you’re liable for, too. These will vary from country to country so be sure to check locally.
Sales Tax and VAT: In many countries such as the UK, there is no sales tax or VAT on the sale of used boats between two private individuals. If, however, you use a broker to sell your boat, there will be VAT on their services.
In the United States there are various taxes imposed on owners when buying a boat (see our Guide to Paperwork and Taxes when Buying a Boat), but when selling a boat you only pay capital gains tax on any profit you make on the sale of your boat. As boats are a depreciating asset, it’s rare for sellers to have to pay capital gains tax. But if, for example, you bought a boat in dire need of a makeover and spent money getting it into great shape, you would only pay capital gains tax on the profit after expenses.
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