Houseboats and Floating Homes: Pros and Cons of Living on the Water

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Singer Otis Redding sat on the dock of the bay, wrote a song about it, and made millions of dollars. What his song didn’t tell us, however, is that he was sitting on a docked houseboat in Sausalito, Calif., and the “bay” is Richardson Bay. Houseboat living was definitely the inspiration for the singer’s all-time biggest hit.

People all over the world live on boats – from fishing trawlers to yachts – but the houseboats most popular in the United States are flat-bottomed and “designed to be floating cottages,” according to Jennie L. Phipps, writing for Bankrate.com.

If you’ve ever toyed with the idea of being lulled to sleep by lapping water, greeted good morning by a cawing gull, and fishing from your bedroom window, a houseboat or floating home may just be a dream come true.

What’s the Difference?

Though most floating homes are called houseboats, there is a difference between the two. A houseboat is capable of leaving the dock under power. “It must have seaworthy hulls, engines and navigational equipment, in addition to meeting U.S. Coast Guard standards for flotation, fuel, and electrical and ventilation systems,” according to Scot Meyer, writing for MSN Real Estate.

A floating home, on the other hand, isn’t considered a water vessel, but a structure built on a floating apparatus, according to Curbed Seattle’s Sean Keeley.

Since even the owners of floating homes typically refer to them as houseboats, we shall too.

Advantages of Living on the Water

There are lots of advantages to living on a houseboat. In some parts of the country, a houseboat isn’t considered real property, so you won’t be paying property taxes. In others it may be considered personal property, and you’ll be levied a small personal property tax annually. Still others differentiate between floating homes, which they tax as real property, and houseboats, which are taxed as personal property. Your real estate agent can let you know the rules in your area.

You also won’t need a gardener or a snow shovel when you live on the water. Plus, you are guaranteed a water view and nobody can build anything that will block that view.

The interest on your loan payment is tax deductible as long as the houseboat is considered a qualified residence, meaning that it is either a first or second home and has a toilet, sleeping areas and cooking facilities.

Disadvantages of Houseboat Life

You may escape the dreaded annual property tax bill by living on a houseboat, but you’ll pay other associated fees, and some of them, depending on where you live, can be significant.

Mooring fees – what you’ll pay for the privilege to dock your floating home – come in two flavors. The first is the basic monthly rental fee and the second is the homeowner’s association fee.

The mooring fee is payment for the actual slip and generally includes utility costs, such as garbage collection, electricity and water. Depending on where you live, the “landlord” may pay taxes and insurance for the moorage and to maintain the common areas.

If the community is managed by a homeowners association, you will most likely pay more at first and then less of a mooring fee on a monthly basis. This is because you’ll generally purchase the slip and won’t be paying rent for it. Though you’ll pay more in the beginning for this setup, if your state taxes your floating home as real property, your annual tax bill will be lower because you’ll only pay taxes on the actual home. The slip isn’t assessed as real property.

Of course, all of this depends on where you moor your houseboat. Even within one city, each facility may have its own set of fees.

Finally, homeowners insurance is more expensive for a houseboat than a land-based home.

The Purchase Process

Financing a houseboat may be challenging, depending on where you live. Interest rates vary by lender but tend to be higher for houseboats than for land-based properties.

The home inspection is also significantly different for houseboats. You’ll need a marine survey, which includes inspection of the hull and the interior. The dive survey can be pricey.

Where to Live

Houseboats are most popular on the Pacific Coast. Sausalito and Mount Shasta in California; Seattle, Wash.; and Portland, Ore., all have floating home communities. The average list price for a Sausalito floating home is over $850,000. In Seattle, look for an average list price of a little over $615,000, and in Portland houseboats range in price from $40,000 to $680,000.

You’ll also find houseboats and floating homes on the Great Lakes, in Kentucky on Lake Cumberland, Lake Travis in Texas, Elephant Butte Lake in New Mexico and along the East and Gulf coasts.

Living on the water affords a unique and serene lifestyle, but it does require adjustment. Houseboats are more exposed to the elements than land-based homes, so they require a new set of maintenance tasks. However, many people who choose this lifestyle say that they wouldn’t trade the views and the camaraderie that develops with other houseboat dwellers for anything.

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