Navigating Houseboat Taxes

Published in the September 2019 Issue October 2019 Multimedia Janet Groene

Taxes are one more area where liveaboards have different concerns, considerations and cautions compared to houseboat vacationers. When the houseboat is your home, many points come into play such as whether you pay a mortgage, have an office on board or otherwise use the boat in business – and whether you involve the houseboat in charity work.

The total tax bite begins with city, county and state levies on the day you buy the houseboat and ends with the IRS in Washington.

Here are some points to consider. The information below is believed to be correct at press time, but should be verified with your own tax advisor.

  • Energy Tax Credit for solar and wind are still in place for homeowners this year. However, benefits depend on when equipment is installed, with a decrease each year until the program expires.  According to www.climatecontrol.com, the same credits apply to a houseboat that is a first or second home.
  • You may buy a new or used boat in a state with no sales tax but the tax applies as soon as the boat spends time, usually 30 days, in another state or is registered there. One advantage here is that a new boat’s value will probably depreciate from new to used by then and sales tax may be less.
  • If you buy in a state with sales tax, there may be a loophole. Some states such as Florida forego state sales tax if you agree in writing that it will leave the state within 30 days.
  • Think you can outrun the tax collector? According to www.boattax.com, intentional evasion of sales tax is a crime. In Maine, for example, it’s a class C crime subject to penalty of up to $5,000 plus the tax and interest.
  • According to www.taxfoundation.org, states with the highest average combined state and local sales taxes are Tennessee, Louisiana, Arkansas, Washington and Alabama – all of them over nine percent. States with no sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon.
  • Some sales promotions may offer “taxes included,” with the dealer eating this cost. States sometimes encourage boat sales by declaring a sales tax holiday or tax reduction on some boats some of the time.
  • If you live in a state or county that imposes personal property taxes, they apply every year. Consider the long-term cost of your boat, car and other personal belongings.
  • State and local authorities throughout the U.S. are quietly applying sales taxes to services such as haircuts, accounting, pump-outs and computer repairs. In Florida, for example, boat repairs up to $60,000 are taxed. Know how your bill will be calculated. If the entire job is “bundled” with labor, parts, supplies and other fees (such as recycling and disposal fees) you could end up paying sales tax on some line items that are not otherwise taxed.
  • Can you get a fuel tax refund? In some states, taxes on marine fuel are channeled into marine uses. In others they go into the highway fund. According to www.americanboating.org, you can file paperwork for a partial refund if your state fuel tax does not support boating interests. If you use a lot of marine fuel and boat in Alaska, California, Connecticut, Delaware, Massachusetts, Missouri, Nebraska, North Carolina, Texas or Virginia, look into the refund program because it applies to you. See each state’s website for filing details.
  • Income tax laws are constantly changing. Can you deduct state and local taxes, mortgage interest, use of your boat for charity purposes (host a fund raiser on board, donate the boat to a charity) or business (have an office on board or use the boat as a demonstrator)? Ask your income tax preparer.

 

About The Author

Janet Groene is a professional journalist and a member of Boating Writers International. She and her late husband, Gordon Groene, lived full-time on the go for ten years. “Living Aboard” is a recurring column that focuses on living on your houseboat. Janet’s newest book, The Survival Food Handbook (International Marine Books), is a guide to provisioning and cooking with common supermarket ingredients to carry in your pantry. Janet posts new galley recipes weekly at www.BoatCook.blogspot.com.

 

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