Boats, Planes, and Taxes

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AA5Bman

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He who ironically no longer flies an AA5B
My wife has decided that she would like to buy a boat.

I am very supportive of this, because I am the only one in the relationship that ever spends any money, and now I will finally have something to hang over her head! :)

We went “boat shopping” yesterday, and I learned a few things that I thought were interesting:

1). Holy kablooey, boats are expensive. I am forever putting to rest in my mind the idea that GA is dying due to the costs. Did you know that you can spend $300,000 on a new ski (surf) boat? Did you know you can get 30 year financing on such a boat? I did not know this.

2). We got talking to the owner of the dealership. He said that some people buy a brand new boat every year, others buy an older boat in cash and never sell it, and still others “work their way up” to a $100,000 boat in $20,000 increments, starting with a $40,000 boat and trading in every couple of years. To this last idea, I just commented something along the lines of “the problem there is that you pay the sales tax over and over.” The owner quickly pointed out that this is not the case - the trader upper only pays sales tax on the *difference* in price between the sold and purchased boat (I sell a $40,000 boat, buy a $60,000 boat, and pay tax on the $20,000 difference).

Does anyone know if this applies to planes, or can be applied to planes? This is one of the things that keeps me from upgrading from my $90,000 plane to a $150,000 plane - a $10,000 tax bill. Would it require a “trade-in” through a dealership? Is there a way to coordinate a “trade-in” when the planes are not bought and sold at the same time, like the grace period on a 1031 exchange?

Boats. Wow. They make us look like paupers!
 
My 26' sailboat cost me $2000. I've put slightly more into it than that renovating and improving her. It costs me almost nothing to use, my wife and I spend many happy weekends aboard sailing, "sundowning," cooking, and in general using it as a moving or stationary summer camp. Yearly slip, winter storage, haulout and launch fees add up to around $1800. Compared to my lowly PA28-140 costs, the boat is practically free.

All depends what kind of boats (and planes) you're comparing.
 
OK first thing's first. Yes, boats have gotten ridiculously expensive over that past 10 or so years. However, they've never really been "cheap" (Break Out Another Thousand). I've owned boats all my life. If there ever was a time I didn't own a boat, I was shopping for one. I've never bought one brand new - I don't know who actually pays those prices, but I'll let some other guy take all the depreciation hit. I still go to the boat show every year, and it usually just reaffirms that I like what I have, and won't pay new prices.

As far as incremental increases in boats, I suppose you could increase every other year or so. "Two-foot-itis" is a thing. But with all the different classes of boats, you'll quickly realize the similarities and where the real differences in size take affect. For instance, ski / wakeboard boats are all in the 18'-22' range, with little differences in layout, powerplant, outdrive, etc. Most cruisers have the basic same floorplan in the 26'-40' range, you really need to get bigger than 40' if you're looking for multiple staterooms, etc.

You're on target for the tax question, however that varies state to state. You do not need to go through a dealer to take advantage of the "sales" tax break on a new purchase. It just usually needs to be accomplished within 90-120 days or so of the sale of the old boat.

I used to think owning / operating a boat was expensive. Aircraft ownership has tempered that perspective. Good luck shopping!
 
We share a 19' Sea Ray Bow Rider with our neighbor. We bought it used, but in very good mechanical and interior condition. It hasn't come close to the cost of my other toys yet (airplane and Jeep).
 
Best two days of boat ownership, the day you buy it and the day you sell it.yes they are expensive but I love my boat. depreciation fluctuates by brand. Im looking at a 330 vantage Boston whaler, a couple year old boat brings almost as much as a new one. As for taxes. State by state. In Texas, aircraft sales between private parties are not taxed.
 
The sales tax trade-in credit can apply to aircraft. It definitely works in ND when you buy from a state registered aircraft dealer. But this is a state by state issue and while state X gives you trade in credit, state Y may sock you for use-tax when you bring the plane home. Inland boats don't move around much and for someone who keeps their dealer in business by buying a new boat whenever the warranty on the engines is up, the trade in credit does work.
 
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My sailboat I bought new, it’s now 15 years old. It costs a lot less to maintain:
Diesel is cheaper than 100LL. Plus it’s a sailboat, I’ve gone to Bahamas and back on 20 gallons of fuel.
No annuals.
I can do most of the repairs.
Aircraft engine overhaul costs 3X marine engine.
Marina costs are a little more than hangar costs.

I live on my boat, I can’t live on my Mooney.

My boat is expensive, but it’s designed for ocean sailing and all that Mother Nature can throw at it. My Mooney isn’t (no turbo, no FIKI, no pressurization).

A new version of my boat costs $325k or more. Sailboats like planes are custom made, lots of labor involved.
 
Margy decided my triple cockpit wooden runabout didn't suit her, so she bought a pontoon boat last week. Boat dealers are very akin to car dealers. Some marinas cap the age of boats you're allowed to have there (fortunately, I own my slip, and Margy is leasing one of our neighbor's). I about cracked up when we went in to look at a used pontoon boat and it had already sold and the buy tried to sell us a new one at twice the price. His big feature was that it came with little clips to hang the fenders on the railing. I figured those were easily obtained on the aftermarket, and they were. $3 at the local marine supplier while picking up some dock lines and other random stuff for Margy's new boat.
 
A boat is a hole in the water that you keep throwing money into! I know I’ve owned many. I’m not a big cruiser or ski guy, but you can spend 80-100k on a bass boat very easily nowadays.
 
Rule #1 of boat ownership.... buy used.. I have a friend that bought the latest and greatest racing boat... was into it for $35K plus including trailer etc.... just sold it for $20K after having it two years and only having sailed in a handful of times

https://www.nacrasailing.com/our-boats/race-boats/nacra-f20/

On the other hand, I bought this for $200 and after a little elbow grease and a bunch of used parts I know have a very competitive boat that I am into for about $3000 including the new sails.


I am sure in your situation there may be just the right USED boat for your wife... the marine market if very soft right now and those with cash are getting some great deals..

Regarding taxes, in the Peoples Socialist Republic of Kaliforniaction you pay a sales tax and a yearly property tax too if the value is over a certain amount..
 
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Pro Tip: Just like a pre-buy with an aircraft, with a boat that is of significant cost, a marine survey is money well-spent prior to signing on the dotted line. Of course I say that (or type it), but I have never had one done on boats I've purchased over the years. But I know my way around boats better than a lot of "marine" mechanics I've seen.
 
I won't understand those who see the value in a new boat or new car unless the cost wouldn't even move the needle in their bank account. They depreciate incredibly fast, especially given the minimal west most boats are in the first 5 years of ownership. We've had the same 20' runabout boat for 25 years, which I believe might father paid about $4K for back in the early 90s. I have had to redo the transom and floor, but upholstery and such is all original. Ford 351w I refreshed when I did the transom, but the engine was running just fine. I just wanted to replace a bunch of components while the engine was out, so I figured why not go through the engine completely. Boats normally only cost a bunch of money when they aren't maintained or problems get left without fixing. Just like aircraft, the more engines and systems you have, the higher the maintenance cost and risk for large repair bills. A 35' cruiser is an RV on the water, so the cost of maintaining twin engines, outdrives, generator, plumbing system, and numerous batteries can be significant if just to neglect.

I think the best value in runabouts right now are the boats from late-90s to early 00's from brands like Cobalt, Formula, and Regal. EFI engines started being used around '97 or so, which can make cold/hot starts a bit easier. They also started having walk-through transoms around '03, so that makes it easier to get from the swim platform into the boat without crawling over the sunpad (in turn being easier on upholstery). I've been eyeing the Cobalt 242/252 for a bit, since we have a growing family and a 20' boat gets a bit cramped with 3-4 adults and 2 kids plus cooler and gear. In my case it's about 5-foot-itis rather than 2-foot, lol.

Also, the number of broke who buy $100K tournament wakeboard/surf boats is absolutely amazing to me. They are the Cirrus drivers of the water. Usually more money than sense, and buy a boat made for a very specific purpose, but are rarely towing wakeboarders. Malibu, Mastercraft, Tige must have a heck of a marketing department. Blows my mind.
 
SoonerAviator said:
Also, the number of broke who buy $100K tournament wakeboard/surf boats is absolutely amazing to me. They are the Cirrus drivers of the water. Usually more money than sense, and buy a boat made for a very specific purpose, but are rarely towing wakeboarders. Malibu, Mastercraft, Tige must have a heck of a marketing department. Blows my mind.
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As the owner of a 17’ Jon boat and as a bass fisherman, I hate those darn wakeboard boats!

A boat designed to create a large draggy wake that upsets other boats and erodes the shoreline is a curse on our waterways. Owners of such boats don’t deserve comparison with any pilot, even Cirrus drivers!




Sent from my iPad using Tapatalk Pro
 
Ventucky Red said:
Rule #1 of boat ownership.... buy used.. I have a friend that bought the latest and greatest racing boat... was into it for $35K plus including trailer etc.... just sold it for $20K after having it two years and only having sailed in a handful of times

https://www.nacrasailing.com/our-boats/race-boats/nacra-f20/

On the other hand, I bought this for $200 and after a little elbow grease and a bunch of used parts I know have a very competitive boat that I am into for about $3000 including the new sails.


I am sure in your situation there may be just the right USED boat for your wife... the marine market if very soft right now and those with cash are getting some great deals..

Regarding taxes, in the Peoples Socialist Republic of Kaliforniaction you pay a sales tax and a yearly property tax too if the value is over a certain amount..
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Yikes! There be sharks in them there waters! Think I’ll stick with them aero planes.
 
I don't know why but I've been watching some videos of Nordhavn boats. I want one now. they're a little slow for my liking but otherwise I wouldn't mind having a toy like that. and I'm only a cool coupl'a million short of getting one. actually there was one I liked and it was roughly a mill. I was like man, u can get all that or one of the latest sr22's for about the same cost. seemed crazy in comparison.
 
Bill Watson said:
As the owner of a 17’ Jon boat and as a bass fisherman, I hate those darn wakeboard boats!

A boat designed to create a large draggy wake that upsets other boats and erodes the shoreline is a curse on our waterways. Owners of such boats don’t deserve comparison with any pilot, even Cirrus drivers!




Sent from my iPad using Tapatalk Pro
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They seem to attract a lot of a-hole owners who don't know the waterway rules, blast music way too loud, and generally have little regard for common courtesy (like running too close to other boats and docks, disregarding no wake zones). They remind me of jet skiers, minus the loud music.

I don't mind people who own them and use them responsibly, but it's 50/50 whether you come across the responsible ones. I love to slalom ski, and it can be annoying when they come crashing into glass smooth water and run around erratic making chop everywhere.
 
SoonerAviator said:
Also, the number of broke who buy $100K tournament wakeboard/surf boats is absolutely amazing to me. They are the Cirrus drivers of the water. Usually more money than sense, and buy a boat made for a very specific purpose, but are rarely towing wakeboarders. Malibu, Mastercraft, Tige must have a heck of a marketing department. Blows my mind.
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The part that truly fascinates me is the combination 60k bass boat and 40k truck to pull it in front of a trailer home or rental property.
 
I grew up with slalom, trick and barefoot - but just slalom in the last decade. The proliferation of the wakeboard boats are the antithesis of what makes for conditions conducive to the water sports I enjoy(ed). So now it's just the 35' cruiser that keeps me and the bride happy - and the dog too!
 
weilke said:
The part that truly fascinates me is the combination 60k bass boat and 40k truck to pull it in front of a trailer home or rental property.
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maybe they know their priorities. There are plenty of people with that same combination and mansions that live pay check to pay check.
 
IMO the sweet spot for boats is 5 years old. In that range you can get a nice boat without a lot of maintenance issues for a great price, and lose very little in depreciation if you sell it.

Never buy an I/O boat regularly operated in saltwater. Maintenance nightmare.

The good news is that the government doesn't give a damn who works on your boat or what they do to it.
 
You can buy a new tritoon with two supercharged 6.2L 450 HP Mercury outboards if you can throw down the $230,000. Don't ask me what the point of that exercise is, but people are buying them as fast as they're made.
 
Ed Haywood said:
Boats are crazy right now. Total seller's market. Dealer lots are empty. Decent used boats get snapped up in days.
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Yes this is literally true - of the two dealerships we visited, one had one used boat, the other zero. And neither of them had more than 3-4 new boats either. These big showrooms just empty and picked over. The one guy told us he had used boats sold almost as fast as people could unhitch them from their car, and they did more business in June than in all of 2019.

Lose your job, get wrecked in the stock market = buy a boat, apparently.

I don’t get it. ¯\_(ツ)_/¯

PS - A 5-year old ski boat is an $80,000 proposition!
 
I've got a 19 foot center console that I am seriously thinking of unloading just to have more money for flying. Paid 20K for it new 8 years ago. I suspect I could get most or all of that now. Next year it won't be worth crap.
 
Ed Haywood said:
Boats are crazy right now. Total seller's market. Dealer lots are empty. Decent used boats get snapped up in days.
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it’s my fault. In April I bought a house on a canal with Gulf access. Last month I bought a boat. Hopefully next week I’ll get to start using it.

I live on the west coast of Florida and the boat was on the East coast. I started looking back in April and had pretty much decided what I wanted, a center console I can take offshore. As mentioned, boats were selling fast and I’m a little impatient, but I also had cash and ready to buy. I found the boat I wanted and my only requirement was to have the engines checked out, a friend and I had drove over and looked it over, but no sea trial.

I had planned on bringing the boat back by water, thru Okeechobee, but the mechanic didn’t recommend it, the trim seals need replaced and there were a few minor thing that he said needed to be addressed. So I go over and buy the boat anyway, and arrange to have the boat hauled over. First surprise was the $160 per day charge for the marina, plus $300 to load on a trailer.

Get the boat hauled over promptly, then I find out it’s going to take at least three weeks to get into the shop, and the 100 hr maintenance is around $1000 per engine. The minor things add up another couple thousand.

So far the boat is costing me quite a bit more than my Debonair. But it will be parked in my back yard if the dock contractor finishes up next week.

Its a 32’ Intrepid. Wish me luck, it’s my first Powerboat. I owned a 27’ sailboat about 15 years ago so it’s all new to me.
EE5BA0E3-BC55-4343-B92E-847012BDD0B9.jpeg
 
One interesting thing is I bought the boat from a individual. For some reason Florida let’s a individual sale itemize the hull from the engine, you only pay tax on the hull. And like planes a big part of the value is in the engines. So i saved quite a bit going that route. It doesn’t apply if you go thru a broker or dealer for some reason.
 
dmcummins said:
it’s my fault. In April I bought a house on a canal with Gulf access. Last month I bought a boat. Hopefully next week I’ll get to start using it.

I live on the west coast of Florida and the boat was on the East coast. I started looking back in April and had pretty much decided what I wanted, a center console I can take offshore. As mentioned, boats were selling fast and I’m a little impatient, but I also had cash and ready to buy. I found the boat I wanted and my only requirement was to have the engines checked out, a friend and I had drove over and looked it over, but no sea trial.

I had planned on bringing the boat back by water, thru Okeechobee, but the mechanic didn’t recommend it, the trim seals need replaced and there were a few minor thing that he said needed to be addressed. So I go over and buy the boat anyway, and arrange to have the boat hauled over. First surprise was the $160 per day charge for the marina, plus $300 to load on a trailer.

Get the boat hauled over promptly, then I find out it’s going to take at least three weeks to get into the shop, and the 100 hr maintenance is around $1000 per engine. The minor things add up another couple thousand.

So far the boat is costing me quite a bit more than my Debonair. But it will be parked in my back yard if the dock contractor finishes up next week.

Its a 32’ Intrepid. Wish me luck, it’s my first Powerboat. I owned a 27’ sailboat about 15 years ago so it’s all new to me.
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Ouch. That’s more than my annual this year before you even get it into the water!
 
dmcummins said:
Its a 32’ Intrepid. Wish me luck, it’s my first Powerboat. I owned a 27’ sailboat about 15 years ago so it’s all new to me.
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Sweet boat. Get some friends to show you the ropes of going offshore. Just like flying, things can turn dangerous if you don't know what you are doing. Tends to happen slower in a boat, but getting to safety or getting help can take a lot longer. Carry an EPIRB or PLB, wear an auto-inflatable if you boat alone, know where your thru-hulls and seacocks are, and check your bilge pump and float switch regularly. Being a pilot will help you a great deal on weather decisions.
 
Went on two boat rescue calls today. One collision with fire, the other just a 22fter taking on water. Crazy boat and jetski traffic on the river, few of them with a working knowledge of the right of way rules.
 
Ed Haywood said:
I've got a 19 foot center console that I am seriously thinking of unloading just to have more money for flying. Paid 20K for it new 8 years ago. I suspect I could get most or all of that now. Next year it won't be worth crap.
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Depending on where you live you should be able to get $30K for it.
 
weilke said:
The part that truly fascinates me is the combination 60k bass boat and 40k truck to pull it in front of a trailer home or rental property.
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Flew from KBUR to KBOI via Southwest.. The guy I sat next to had a bunch of PayDay loan companies. This was when they were under-fire for being predators, unlike the mortgage companies at the time, and look at the mess that got us into. He kind of said the same thing, no one is holding a gun to their heads a telling them they need to buy a 70" widescreen, bass boat, etc... If he didn't lend them the money, someone else would, and they were still better than what some of the department store credit cards were offering.

weilke said:
Went on two boat rescue calls today. One collision with fire, the other just a 22fter taking on water. Crazy boat and jetski traffic on the river, few of them with a working knowledge of the right of way rules.
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Any DUI for the boaters?
 
I've never seen a boat dealer or a department store charge 400% APR interest. The guy is delusional. He's preying on the stupid. Whether there should be a law or not is up in the air, but just because you can exploit someone (or something) doesn't mean you should.
 
Ventucky Red said:
Any DUI for the boaters?
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Plenty of that happening. The natural resources cops are usually working alone, so conducting a DUI stop is pretty involved.

While overall, 'boating while intoxicated' is listed as the #4 cause for boating accidents in the state, I am under the impression that rank goes up for anything that happens in the late afternoon and after dark.
 
weilke said:
Went on two boat rescue calls today. One collision with fire, the other just a 22fter taking on water. Crazy boat and jetski traffic on the river, few of them with a working knowledge of the right of way rules.
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I live near a popular resort type lake and am also on the fire department. The lake has been absolutely crazy this year, with its share of incidents as well.

It has always amazed me that a boat is just about the only type of powered vehicle that has zero required training/licensing/insurance to operate.
 
I just broke my “I’ll never own a boat” mantra yesterday. I bought a kayak.
 
eman1200 said:
I don't know why but I've been watching some videos of Nordhavn boats. I want one now. they're a little slow for my liking but otherwise I wouldn't mind having a toy like that. and I'm only a cool coupl'a million short of getting one. actually there was one I liked and it was roughly a mill. I was like man, u can get all that or one of the latest sr22's for about the same cost. seemed crazy in comparison.
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https://www.pershing-yacht.com/en-us/

The 108 will do 40 knots and throw a 20 foot tall rooster tail for just a couple extra million. Holds 3000 gallons of gas too.
 
midwestpa24 said:
I live near a popular resort type lake and am also on the fire department. The lake has been absolutely crazy this year, with its share of incidents as well.

It has always amazed me that a boat is just about the only type of powered vehicle that has zero required training/licensing/insurance to operate.
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Well, that varies by state, but many of them don't have any test or a grandfather clause I'd you were born prior to 1970. I remember having to pass a quick test when renting a jetski in Florida when I was 15 or so. 15 minutes in the car looking at the regulations and heard the test.

Oklahoma requires no such test, lol.
 
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