Boat LLC in California (2026): Use Tax & the $800 Tax

Short answer: an LLC can be a good way to own a boat kept in San Diego, Newport Beach, Marina del Rey, or on San Francisco Bay — for liability separation, co-ownership, and a clean holding structure — but it won’t lower California’s taxes. Use tax is charged at the combined local rate where the boat is kept or registered (7.75% in San Diego and Newport Beach, 11% in Long Beach), the county assessor bills about 1% of its value every year, and under the 12-month test an LLC that Californians own 50% or more of is treated as a California buyer — as is, since September 30, 2026, a “shell” LLC used to dodge the tax with even one California member. On top of that, the Franchise Tax Board charges LLCs $800 a year — out-of-state LLCs included, once they’re doing business here.

Key takeaways

California use tax on a documented boat is charged at the rate where you principally moor or berth it, not where you live; a DMV-registered boat is taxed at the location on its registration (list the marina, or DMV uses your address). Where the owning LLC was formed never changes the rate.
The old “90-day loophole” is gone. Since October 1, 2008, a 12-month test presumes a boat brought into California within a year of purchase was bought for use here if a California resident bought it (an LLC counts when Californians own 50%+ of its membership interests — or, since September 30, 2026, when it’s a shell LLC with any California member), it’s subject to California property tax in its first 12 months, or a nonresident buyer uses or stores it here more than half that year — unless you can rebut it with real documentation.
An out-of-state LLC does not avoid use tax, and it can still owe California’s $800-a-year franchise tax if it’s managed from California or its California property exceeds the lesser of about $75,700 or 25% of its total real and tangible property — a test a single-boat LLC with the boat kept here meets almost automatically.
County assessors appraise boats at fair market value every January 1 and bill about 1% of that value (plus local add-ons) — wherever the boat is habitually moored, LLC-owned or not.
Registration runs through either the CA DMV (undocumented vessels) or USCG documentation (vessels of 5+ net tons) — either way, an LLC can be the owner.

Why California boat owners form LLCs

The core reasons match our national boat LLC guide:

Liability. A guest hurt on the swim step, a crewed day gone wrong, a fuel-dock incident — when an LLC owns the boat, a boat-related claim is aimed first at the LLC and its assets rather than everything you own. (It never shields you from your own negligence at the helm, and insurance stays your first line of defense.)
Co-ownership. Partnership boats are common in expensive California slips. An LLC gives shared owners real percentages, an operating agreement, and a buyout mechanism that doesn’t require re-titling the boat.
Privacy, within limits. The LLC’s name — not yours — goes on the DMV registration or Coast Guard documentation. But a California LLC (or an out-of-state LLC registered here) files a Statement of Information every two years that publicly lists its managers — or, if it has none, each member — with an address (a business address can stand in for a home address).
Transfers. Selling membership interests can move the boat without re-documenting it — with the honest caveat that California tax agencies look at substance, and a transfer structured to dodge tax invites scrutiny.

What an LLC does not do in California: make use tax, property tax, or the franchise tax go away.

California use tax: the rate follows the mooring

Buy a boat from a California dealer and sales tax is collected at the sale. Buy from a private party, or out of state, and California use tax applies instead when the boat is for use here — see the CDTFA’s vessel tax guide for the full mechanics. The statewide base rate is 7.25%, with district taxes on top that vary by locality. For a documented vessel, the applicable rate is the one where you principally moor or berth it; for a DMV-registered boat, it’s the location on the registration — list the marina in Section 3 of the DMV’s BOAT 101 application (where the vessel is principally kept), or DMV uses your own address. Moor a documented boat in Long Beach and you pay Long Beach’s 11% combined rate; moor it in San Diego and you pay 7.75% — on a $300,000 boat, $33,000 versus $23,250. Who you pay depends on the boat: the DMV collects at registration for undocumented vessels, while owners of USCG-documented vessels report and pay directly to the CDTFA. If you already paid another state’s sales or use tax on the purchase, the CDTFA generally credits it against what California is owed.

Combined rates at major California boating locations, from the CDTFA’s rate table effective October 1, 2026 (rates change quarterly, and statewide they run 7.25% to 11.75% — check your marina’s address before you budget):

Where the boat is kept	Combined rate	Use tax on a $300,000 boat
San Diego, Newport Beach, Dana Point, Huntington Beach	7.75%	$23,250
San Francisco	8.625%	$25,875
Sausalito	9.25%	$27,750
Marina del Rey (unincorporated L.A. County)	10.25%	$30,750
Alameda, Oakland	10.75%	$32,250
Long Beach	11.00%	$33,000

The 12-month test (and the ghost of the 90-day loophole)

California’s famous “yacht loophole” — take offshore delivery, keep the boat out of state 90 days, sail home tax-free — is long gone. Since October 1, 2008, the rule set out in Revenue and Taxation Code Section 6248 has been a 12-month test: a vessel purchased outside California, first used outside California, and brought in within 12 months of purchase is presumed to have been acquired for California use, and owes use tax, if any of these hold:

the purchaser is a California resident — and an LLC counts as one when California residents hold 50% or more of its membership interests (in effect since January 1, 2010), so a Montana or Wyoming LLC owned by Californians is treated as a California buyer,
the vessel is subject to California property tax during its first 12 months, or
a nonresident purchaser uses or stores the boat in California more than half the time in that first year.

New for 2026: California's shell-LLC rule (SB 1406)

Effective September 30, 2026, SB 1406 tightened the 12-month test for entities, and it covers vessels as well as vehicles and aircraft. A closely held LLC already counted as a California resident if Californians held 50% or more of its membership interests. Now a “shell company” — an entity used to evade the tax — is a California resident if any member or beneficial owner is. Evidence of a shell includes lacking a specific business purpose, having no physical location outside California, having no W-2 employees, or not filing federal returns or required returns in another state. Under new R&TC 6829.5, if the CDTFA shows a shell kept or used the boat in California within 12 months of purchase without paying the tax, its officers, managers, members, and beneficial owners are personally liable for the tax, interest, and penalties. The CDTFA has about three years from when it learns of the in-state use to bill.

The presumption runs against you

The presumption is rebuttable — but with receipts, not intentions: purchase and delivery documentation, an insurance policy showing the boat’s navigational limits, out-of-state slip and mooring invoices, fuel and repair receipts, foreign port records, evidence of tax paid to another state, bank statements placing the boat elsewhere. See the CDTFA’s 12-month test FAQ for the details. Genuine exemptions exist too: qualifying family transfers, boats brought in solely for repair at a licensed facility, commercial use in interstate or foreign commerce (generally, one-half or more of the vessel’s nautical miles in its first six months after entering California must be commercial interstate or foreign voyages — personal use doesn’t count, so it isn’t a label a pleasure boat can adopt), and vessels that only touch California on their way out of it.

CDTFA enforcement is real

Assume the CDTFA will find your boat. It says it locates and investigates unreported vessel sales “through regular audits and other sources,” and where no return was filed it generally has eight years from the due date to send a bill (Publication 79). For a documented vessel, use tax is due by the last day of the month after the CDTFA contacts you or the last day of the 12th month after the month you bought the boat, whichever comes first — so waiting for a letter doesn’t stop penalty and interest from accruing. If your boat lives at a California dock, plan on California use tax; anything else needs documentation strong enough to survive an examiner.

The $800-a-year gotcha: California’s LLC franchise tax

This is where most out-of-state boat LLCs get caught: whether the $800 applies turns on California’s doing-business test, not on the state that formed the LLC.

Every LLC that is organized in California, registered with the California Secretary of State, or doing business in California owes the $800 annual franchise tax — every year, even with zero income, until the LLC is dissolved or withdrawn (one new wrinkle: under R&TC §17941(g)(2), an LLC whose first taxable year begins in 2027 through 2029 pays $400 instead of $800 for that first year only). And “doing business” is deliberately broad. The FTB’s own guidance on doing business in California treats an out-of-state LLC as doing business here if it’s commercially domiciled or managed from California, or if its California property, payroll, or sales exceed annually adjusted thresholds — and the property test is met once California property exceeds the lesser of an inflation-adjusted amount ($75,707 for 2025) or 25% of the LLC’s total real and tangible property. So an LLC whose main asset is a boat kept in a California marina meets it at almost any boat value: a $40,000 boat that is the LLC’s only asset puts 100% of its property here.

None of this makes the LLC pointless — liability separation and co-ownership are worth real money too. It means the tax math should be done honestly: for a California-kept boat, budget the use tax, the county property tax (about 1% of the boat’s assessed value, every year), and — if the LLC is organized here, registered here, run from here, or keeps the boat here (which by itself usually meets FTB’s property test) — the $800.

DMV registration vs USCG documentation

California runs the same two-track ownership system as everywhere else, and an LLC can be the owner on either track:

CA DMV registration. Undocumented vessels register with the DMV, get a CF number for the hull, and renew by December 31 of every odd-numbered year for modest fees; a boat bought out of state must be registered within 120 days of entering California. The DMV collects any use tax due at registration — this is where a private-party purchase gets taxed.
USCG documentation. Vessels of at least five net tons (a volume measure, not weight — the CDTFA’s rule of thumb is about 28.5 feet of length) wholly owned by U.S. citizens can be federally documented instead; documented vessels don’t register with the DMV. An LLC can be the documented owner if it meets the Coast Guard’s citizenship requirements — for a recreational endorsement, NVDC guidance requires the LLC’s members to be U.S. citizens. Documented owners handle use tax directly with the CDTFA.

Either way, the county assessor still finds the boat: vessels are assessed annually at fair-market value as of January 1, at the 1% basic rate plus local voter-approved additions. Assessors work from DMV, Coast Guard, and marina records, so this bill arrives whether or not you registered anything — and the DMV may deny a registration renewal or transfer if the county tax collector reports unpaid personal property tax.

And before any transfer of a boat you already own into a new LLC: check the tax consequences and get lender consent if the boat is financed. California can treat a transfer for consideration as a taxable sale.

Where FilingDesk fits

FilingDesk forms Wyoming, Florida, and Delaware LLCs today — flat $99 plus the state fee ($199, $224, and $209 all-in respectively), with a human specialist reviewing every filing, EIN and operating agreement included, no upsells. California formation is on our roadmap.

When you’re ready to form the LLC that will hold the boat, start here.

Frequently asked questions

How much is use tax on a boat in California?

The statewide base rate is 7.25%, plus district taxes that vary by locality — combined rates run up to 11.75% in the CDTFA's table effective October 1, 2026. For a documented boat, the rate is the one where you principally moor or berth it: a documented boat kept in a Marina del Rey slip is taxed at unincorporated Los Angeles County's combined rate (10.25% as of October 1, 2026) even if you live in Orange County. For a DMV-registered boat, the rate follows the registration — the location you list as where the boat is principally kept, or your own address if you leave that blank. The owning LLC's state of formation never changes the rate.

What is California's 12-month test for boats?

A vessel purchased outside California, first used outside California, and brought into the state within 12 months of purchase is presumed to have been bought for use in California and owes use tax if the buyer is a California resident, the boat is subject to California property tax in its first 12 months, or a nonresident buyer uses or stores it here more than half that year. An LLC counts as a California resident when Californians hold 50% or more of its membership interests — and since SB 1406 took effect on September 30, 2026, a shell LLC used to evade the tax counts as one if any member or beneficial owner is a Californian. You can rebut the presumption with hard evidence of principal use outside California: mooring receipts, fuel and repair invoices, and delivery documentation. This replaced the old 90-day rule, which briefly returned in 2007–2008 before the 12-month test became operative on October 1, 2008.

Does a Wyoming or Montana LLC avoid California use tax on my boat?

No. California use tax attaches to the boat's use and mooring in California, not to the owner's state of formation. For the 12-month test, an LLC is itself a California resident when Californians hold 50% or more of its membership interests (Revenue and Taxation Code §6248). Since September 30, 2026 (SB 1406), a 'shell company' — an LLC used to evade the tax, with evidence such as no specific business purpose, no physical location outside California, no W-2 employees, or no federal or other-state tax returns — counts as a California resident if any member or beneficial owner is one, and its members, managers, officers, and beneficial owners can be held personally liable for the unpaid use tax, interest, and penalties (§6829.5). The CDTFA locates unreported vessel sales through audits and other sources, and where no return was filed it generally has eight years to send a bill. Out-of-state LLCs remain useful for liability and co-ownership; they are not a tax device here.

Does the $800 franchise tax apply to an out-of-state LLC that just holds a California boat?

It can, and owners should assume it may. Every LLC organized in California, registered with the California Secretary of State, or doing business in California owes the $800 annual franchise tax. FTB treats an LLC as doing business here if it is managed from California or its California property, payroll, or sales exceed annually adjusted thresholds — the property test is the lesser of $75,707 (2025, indexed yearly) or 25% of the LLC's total property, so an LLC whose main asset is a boat kept in California meets it at almost any boat value. If you live in California and run the LLC from here, the managed-from-California test likely applies regardless.

Do I register my boat with the DMV or the Coast Guard?

Undocumented vessels register with the California DMV, which issues CF numbers and collects use tax at registration. Boats of at least five net tons (a volume measure — the CDTFA's rule of thumb is about 28.5 feet of length) can instead be federally documented with the USCG — documented vessels skip DMV registration, and their owners pay any use tax directly to the CDTFA. An LLC can be the owner in either system, subject to USCG citizenship rules for documentation.

Does California charge annual property tax on boats?

Yes. County assessors assess vessels each January 1 at fair market value, and the basic property-tax rate is 1% plus any voter-approved local additions. This applies wherever the boat is habitually moored — San Diego, Orange County, Los Angeles, and Bay Area assessors all bill boat owners annually — and it applies to LLC-owned boats the same as personally owned ones.

Sources

This guide is general information, not legal advice. FilingDesk is not a law firm.

Forming an LLC for your boat in California