Leasing or renting a boat or trailer is a taxable sale in Idaho. You’re renting out or leasing out your boat or trailer if you allow someone to use it and you receive payment (cash, property, or other financial gain). Whether you’re a business owner or an individual, you’re a retailer if you make more than two sales (including boats or trailers) or hold yourself out as being in business.
Examples of retailers
- You list and lease out or rent out your boat through an internet marketplace.
- You advertise and lease out or rent out your trailer through word-of-mouth.
- You make more than two sales in a 12-month period (including boats or trailers) or hold yourself out as being in business.
Retailers must:
- Get a seller’s permit. (See the Idaho Business Registration guide to learn more.)
- Collect tax on the full amount you charge for the lease or rent.
- Forward the tax with the sales tax return that you file with the Tax Commission. (See the Retailers guide.)
Responsibilities
You don’t need to collect tax when you list your boat or trailer with a marketplace facilitator that collects and forwards the tax to the Tax Commission. This table shows tax responsibility in different leasing scenarios.
| Scenarios: Leasing or renting an individual’s boat or trailer in Idaho | Who’s responsible for collecting and forwarding tax due? |
|---|---|
| The boat or trailer is in Idaho and both of these apply: (a) The boat or trailer owner leases or rents it out directly to the customer without using a marketplace facilitator; (b) The customer reserves the boat or trailer and pays the owner directly. | The owner must register as a retailer to collect, report and forward taxes on the lease or rental price of the boat or trailer. |
| The boat or trailer is in Idaho and the owner always leases out or rents out the boat or trailer using a marketplace facilitator. | The marketplace facilitator must register as a retailer, collect, report and forward taxes on the sales price of the boat or trailer leases or rentals. |
| The boat or trailer is in Idaho and is: (a) Sometimes leased or rented directly from the owner. (b) Sometimes leased or rented through a marketplace facilitator that arranges the leases or rentals. | The owner and the marketplace facilitator are responsible for taxes as follows: (a) The owner must collect, report and forward tax on the sales price of leases or rentals he or she arranges. (b) The marketplace facilitator must collect, report and forward taxes on the sales price of leases or rentals arranged through its platform. |
You’re ultimately responsible for collecting and forwarding all taxes due on your boat and trailer
If you rent out your boat or trailer through a marketplace facilitator, check to see which, if any, taxes it collects and forwards for you. If the invoice doesn’t show that the correct tax was paid, we can assess tax on either party.
When to collect tax
The type of lease or rental determines when you collect tax. Boat and trailer leases and rentals fall into three general categories:
| Type of lease or rental | How the lease or rental works | When to collect sales tax |
|---|---|---|
| Basic lease or rental | The customer returns the boat or trailer to the lessor at the end of the lease or rental term. | Collect sales tax on each lease or rental payment. |
| Lease or rent with option to buy | The customer has the option to buy the boat or trailer during or at the end of the lease or rental term at fair market value. | Collect sales tax on each lease or rent payment and on the buyout price the customer pays when buying the boat or trailer (if they exercise the buyout option). |
| Lease-purchase agreement | The customer makes regular payments during the lease or rental term. At the end of the term, title to the boat or trailer passes to the customer for $0 or an amount that’s less than fair market value. | The customer owns the boat or trailer at the end of the lease or rental term, so this is a sale and a financing arrangement. Collect sales tax at the beginning of the lease or rental on all the payments the customer will make during the lease or rental term. (The interest portion of the total lease payments isn’t taxable if it’s separately stated.) At the end of the rental or lease term, collect sales tax on any buyout amount you charge on the purchase of the boat or trailer. |