Do You Have To Pay Taxes If You Live On A Boat?
Benjamin Franklin famously wrote “in this world nothing can be said to be certain, except death and taxes.” While humans have not found a way to escape death, they have discovered plenty of ways to pay less taxes. A growing number of people are choosing to sell their homes and live on boats to do just that. So, do you have to pay taxes if you live on a boat? Yes, you still have to pay taxes when you reside on a liveaboard boat. However, there are ways to minimize your tax bill as well as multiple tax advantages of living on a boat.
Common Taxes Boat Owners Have To Pay
Boat and yacht owners cannot fully escape paying taxes. There are four main types of taxes that boat owners pay including those who choose to live on their yachts.
- Sales Tax – Owners pay this tax when they purchase a boat. A sales tax are usually state or local taxes, since there is no federal sales tax imposed on a boat purchase. Typically, a state sales tax is only applied to a certain portion of the purchase price of the vessel. In some states, sales taxes are flat rates, but usually are capped at a certain amount. Depending on the county or municipality you purchased the boat in, another small percent in local sales tax may be charged.
- Use Tax – If you don’t pay a sales tax in the state you made the purchase, you will likely have to pay a use tax in the state you will be operating and storing the vessel in. Like a sales tax, a use tac is only applied to a certain amount of the boat’s purchase price. If the state you made the purchase in has a higher sales tax than the use tax charged by the state you will be transporting the boat to, you may want to avoid paying the sales tax in favor of the use tax. Talk with a yacht financial management expert to know your options.
- Personal Property Taxes – Once you complete the purchase and own the boat, you may have to pay a personal property tax each year. This personal property tax is similar to the one RV and private plane owners have to pay. Some states do not impose personal property charges. To avoid paying personal property taxes when living on a boat, you will have to set up base in one of those tax havens.
- Property Taxes – Those who dock their liveaboard boat will have to pay property taxes on a boat slip. If you own a boat slip, the deeded slip is assessed by the local municipality and will be subject to the same property tax rates as homes. If you are leasing a boat slip, property taxes will usually be included in the monthly lease price. However, there are ways to avoid paying property taxes when living on a boat. For vessels that are always at sea and only briefly stay in ports, you are less likely to be subject to property taxes.
Yacht Management South Florida, Inc. is yacht management company with our own full-service boatyard in Fort Lauderdale, FL. Our team of yacht managers and technicians work together to ensure complete yacht care and stress-free yacht ownership to all our clients. Send us a message or call (954) 941-6447 today to learn more about our reasonably priced services.