Carefully structuring the purchase of a big-ticket item can minimize the amount of Washington State taxes. Sales or use tax is due on purchases made by consumers, but there is an exemption when purchases are made for resale. Washington law recognizes the purchase of property to be leased to another person as a purchase for resale, and therefore exempt from sales tax. By purchasing big-ticket items in one entity and leasing the property to an individual or other entity, sales and use tax can be avoided on the original purchase. However, sales or use tax will be due on the lease payments attributable to use of the property in Washington. When executed properly, this strategy can provide significant savings of sales and use tax, especially if the property will be used primarily outside of Washington.
 
Result #2: We helped a client save over $300,000 in sales and use tax by carefully structuring the purchase of a motor yacht as a purchase for resale.
 
If you have questions about state tax planning, contact Darcy Kooiker, CPA, Principal, Director of State and Local Tax Services at dkooiker@bpcpa.com or 425.289.7609.