Liveaboards and taxes?

[Timothy H.]

Maybe it would be better for me to ask a CPA rather than an online sailing community, but I have a question for anyone who has any experience with my situation.
If I buy a boat to live aboard, can I legally call it my home even though it doesn't have a permanent physical address, and could it be used as a tax deduction of some sort? I'm 18 and have always worked under the table, so this whole tax thing is kind of new to me.
Thanks,
Tim

[mikedefieslife]

No idea how it works in the USA, but in the UK and Europe, you are liable for tax in the country that you live in for 183 days of the year. This is why so many cruisers flee Spain for 6 months of the year. Generally, you can't give up tax residency of one country without taking it on in another, especially if you still have ties to that original country.

[denverd0n]

An indication of where you live would help. We have a lot of participants on this forum from all around the world.

That said, if you are in the U.S. then you can call a boat your home, and you can get a mortgage interest deduction for it on that basis. That, of course, is assuming that you borrow money to buy it. Which might be an issue if you are only 18 and have never worked "above the table" before!

Unless you actually work out of your home, though, the mortgage interest deduction is the only one available. You do get deductions for state taxes that you pay, and some of those may (usually do) apply to both homes and boats. You don't get any other special deductions, though, just because you own a home.

[ValiantV]

In the US, if your deductible home expenses (mortgage interest, property tax) are the only deductions you have, they are unlikely to exceed the "standard deduction" - so you'd probably end up taking that.

If you've been working under the table thus far and doing well at it, why change? Better off financially not to become part of "the system".

[Timothy H.]

Thanks all for the replies.
I'm from North Carolina, but am currently working on a fishing boat in Alaska. I earn a crew share at the end of the year, and will have about $8,000 that I plan to buy an old boat with. I've got experience day sailing my brothers soverel 28 and cruising in my dads Morgan 30, and have done a fair amount of work on both those boats, so I realize boat refit is no cakewalk.
I have my eye on a $5,000 cal 29 in Bellingham, Washington. Only downside is the Atomic 4 isn't running. Planning to drive down the Alaskan highway with a fellow crew mate and maybe buy it after fishing season. Hopefully it will still be available.
Tim

[Chuck34]

Using a mortgage deduction isn't going to work for you.
However, most likely (depending where you berth the boat) you will be paying property tax on the boat.
But as said above, tax write offs, deductions, etc. ain't going to work for someone flying under the tax radar.

[Nicocrispi]

A boat can even be considered a second home for federal tax purposes if it has a galley, an installed head and sleeping berth. Careful, they do conduct occasional audits.

[rwidman]

If you continue working "under the table", the government will eventually provide a home for you and you won't need the boat.


If you are not paying taxes you won't need a tax deduction.


That said, a boat can't be used as a tax deduction but if you take out a loan to buy it, the interest can be a tax deduction if the boat qualifies as a home. The interest on a $5K loan is not going to be a large deduction. And you may have a hard time finding a bank to give you a loan on a $5K boat.

[ValiantV]

Originally Posted by Timothy H.

Thanks all for the replies.
I'm from North Carolina, but am currently working on a fishing boat in Alaska. I earn a crew share at the end of the year, and will have about $8,000 that I plan to buy an old boat with. I've got experience day sailing my brothers soverel 28 and cruising in my dads Morgan 30, and have done a fair amount of work on both those boats, so I realize boat refit is no cakewalk.
I have my eye on a $5,000 cal 29 in Bellingham, Washington. Only downside is the Atomic 4 isn't running. Planning to drive down the Alaskan highway with a fellow crew mate and maybe buy it after fishing season. Hopefully it will still be available.
Tim

Hey Timothy,

I'm sure others have already hinted at it, but the economics of buying an "old" boat are grim enough without even getting into deductions.

With $8,000 to spend and plunking down $5k of that on the boat, you don't have much left for fixing things up - even if the engine were in running shape.

Aside from the engine, has anybody knowledgeable and objective looked the boat over for you? Hauling out and doing a bottom job (blister repair?) Can set you back another grand without even trying. Rigging, sails, through hull, bilge pumps, etc all add up really fast.

Not trying to be a wet blanket - we're learning the ropes ourselves on out first owned boat that had a pretty clean bill of health from a professional surveyor and is still soaking up a lot of cash.

[Timothy H.]

Originally Posted by ValiantV

Hey Timothy,

I'm sure others have already hinted at it, but the economics of buying an "old" boat are grim enough without even getting into deductions.

With $8,000 to spend and plunking down $5k of that on the boat, you don't have much left for fixing things up - even if the engine were in running shape.

Aside from the engine, has anybody knowledgeable and objective looked the boat over for you? Hauling out and doing a bottom job (blister repair?) Can set you back another grand without even trying. Rigging, sails, through hull, bilge pumps, etc all add up really fast.

Not trying to be a wet blanket - we're learning the ropes ourselves on out first owned boat that had a pretty clean bill of health from a professional surveyor and is still soaking up a lot of cash.

My dad and brother both own "cheap" boats that I've helped them work on, so I'm well aware of the costs. I'm a no frills guy, so I'd be happy with a bare hull with a camping pad and stove. I was planning to live aboard and fix it up as I earned money.
We'll see. I just got an apprenticeship as a machinist offered back in NC, so I will be leaving fishing three weeks early, but I'll be saving as much money as I can. Maybe I'll be able to afford a $15,000 boat in a couple years.

[sailorchic34]

You can claim a homestead exemption in some states. I did in California. It's not lots of savings. Maybe $50 a year of CA boat property tax.

[newhaul]

Thankfully washington doesnt have vessel property tax.

[Zven]

Originally Posted by Timothy H.

My dad and brother both own "cheap" boats that I've helped them work on, so I'm well aware of the costs. I'm a no frills guy, so I'd be happy with a bare hull with a camping pad and stove. I was planning to live aboard and fix it up as I earned money...

That is a great attitude.
I say, go for it!

[hellosailor]

Tim-
You should know that the IRS has been fairly pro-active and friendly for the past 25-35(?) years, at least compared to many state and local tax departments. They used to have a toll-free number to answer tax questions. And, a fax-back system to actually send printed documents by fax. Or you could request they mail the publications to you. There's a specialized publication on almost every tax topic you can think of. All free. And of course now that there's an internet...all available from their web site as well.
So when in doubt, FIRST ASK THE IRS.

Head, bed, galley, and yes, anything can qualify as your home and residence. Working off the boats can be profitable, but the IRS is also very good at math. If you ever get a credit cad or bank account or mortgage? Yeah, the IRS may get copies of that and eventually ask why you haven't been filing taxes. Even if you made nothing and owe nothing--it is illegal not to file, so it pays to do a free online "zero due" filing. Or get the form at your local post office or library in tax season and spend 50c to mail it in.

The IRS can be really clever at finding out who has not been paying taxes, so if you think you can fly below the radar, and you think that can pay off (no social security, etc.) just be Real Damn Sure that you are smarter than they are, and you are ENTIRELY off the books, all books, and can explain how you survive that way.

[newhaul]

You should always file.as making something just make it the right amount that you dont owe more than a oht a hundredin taxes. You will be happy you did this when it comes time to start getting social security. ( y the time you are tthat old like us it will probably start drawing at age 75 or 80.) But trust an old self employed guy if you do this you will be better off. List your income as casual labor.