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Ask a Maritime Attorney: Annual Possessory Interest Tax on Previously Owned Slip.


I have a question about the assessment of “possessory interest” taxes on my marina slip. I keep my boat in a city-owned marina.  After months of complaining that my dock was sinking, they finally moved me to a new slip and completely dismantled my old slip.  The slip has not been replaced, so I was really surprised when I received a tax bill from the county earlier this year for my old slip.  The bill indicated that it was for the period from July 1 of this year through June 30 next year.  When I contacted the assessor’s office to question this, they advised that they are unable to pro-rate or refund taxes when a tenant leaves a slip in the middle of the year.  This seems ridiculous in light of the fact that I left before July 1, and in light of the fact that the slip no longer exists!  This is important to me because my new slip is in less desirable location, and as such I assume the value, and therefore the taxes will be lower.  Regardless of the amount of the assessment on the new slip, I am concerned that I will end up being taxed on both slips.  Do I have any recourse at all with all of this?



Our reader is referring to the annual Possessory Interest Tax paid by marina tenants to the county in which a publicly owned marina is located.  When a person or entity leases, rents, or uses real estate owned by a government agency, that person or entity has a taxable possessory interest in the property.  In this case, “real estate” includes tidelands adjacent to government-owned property, which in turn includes city-owned marinas.  You owe the tax because your landlord is a tax-exempt government entity.

Ordinarily, the owner of the marina would be responsible for paying property tax on the assessed value of the entire marina.  However, in the case of a municipal marina, the property owner is a tax exempt government entity, and under California law the obligation to pay property tax is passed on to the individual tenants of the marina in the form of the Possessory Interest Tax.  The justification for this treatment is that a commercial marina would pass its property tax burden on to its tenants in the form of higher rents, and that the rent in a municipal marina is therefore artificially low.  Theoretically.

In any case, regardless of the name of the tax or the justification for the tax, it is part of the property tax system.  The owner of the property (or in this case the possessor of the property) on January 1st of each year is liable for the tax each year.

Property tax should not be viewed as a tax for a particular time period (such as a year).  Instead, it is a tax assessed on the person who owned or had possession of the property on January 1st each year.  We may agree to pro-rate the tax when we buy a boat or a home, but in fact January 1st is the only date that matters and the other 364 days each year are essentially tax free.  It makes no difference if you sell or move away on January 2nd.  You still owe the entire amount of the tax as of January 1st.  Likewise, if you move into a slip on February 1 and move out on December 1, you owe no tax for the year because you were not a tenant on January 1.

In our reader’s case, he was the possessor of record on January 1, so he owes tax for this year.  Period.  The fact that the slip no longer exists is totally irrelevant, because he is only being taxed for his possession of the slip on January 1.  And, he won’t receive a tax bill this year for his new slip because he was not the possessor of that slip on January 1.

The most confusing aspect of the property tax system is probably the reference on the tax bill to the July 1 to June 30 time period.  This reference is actually to the fiscal year during which the county will be spending the tax money.  It has nothing to do with the taxpayer’s obligation to pay the tax, and as such it really does add a lot of confusion to the process.  Again, the only date that is relevant to the assessment is January 1.

Finally, the fact that our reader’s original slip may have been in a more desirable location or was otherwise perceived to have a higher value has no bearing on the assessed value of the slip.  As such it has no bearing on the amount of the tax unless the marina charges a different rate for the more desirable slip.  The assessed value of a possessory interest in commercial property is based upon a valulation of the rights held by the user of the property rather than an assessment of the value of the property itself.  The rights of a marina tenant are derived from their slip rental agreement, and the assessed value is based upon the estimated net income generated by the slip for the year rather than the estimated market value of the real estate.  In our reader’s case, since the rent at his new slip is the same as the rent at his old slip, the estimated net income received by the marina for the slip will be the same, and his tax bill will therefore be the same for the new slip.

More detailed information regarding property tax questions will be available through the tax assessor’s office for the county in which the property is located or by contacting an attorney experienced in yacht and marina property tax issues.

David Weil is licensed to practice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state. 

David Weil is the managing attorney at Weil & Associates ( in Seal Beach. He is certified as a Specialist in Admiralty and Maritime Law by the State Bar of California Board of Legal Specialization and a “Proctor in Admiralty” Member of the Maritime Law Association of the United States, an adjunct professor of Admiralty Law, and former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-799-5508, through his website at,  or via email at





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