The Real Cost of Owning a Boat

Boats almost seem to be a rite of passage for those with some expendable income. There are few things that can compare with spending a sunny day out on the lake or ocean. Boats can be great fun.

While smaller, used boats can be economical, larger boats can cost a fortune to own and maintain.

Boats require maintenance, storage, safety equipment, and a lot of other expensive items. Being aware of these costs will allow you to make a wise decision about purchasing a boat.

Consider these costs:

1. Purchase price. Boats vary dramatically in cost. A small boat for water-skiing will cost around $18,000. A similar size sailboat can cost an additional $20,000. A powerboat or sailboat in the 40-foot range is around $400,000.

· If you’re financing your boat, there’s also the additional cost of interest and additional insurance.

2. Just like your car, you’ll have to pay title, insurance, and registration. This varies from state to state. Insurance rates vary depending on the type of boat, the length, and the location. Your insurance agent should be able to provide the information you need.

3. Sales tax. Sales taxes apply to boats in most states. Each state has its own laws. Where the boat is actually used can affect the tax rate. The tax on a boat can be as high as 10%

4. Time. Boats require a lot of time. It’s not just the time spent using the boat, but also the cleaning, putting the boat in the water, taking the boat out of the water, and driving back and forth. A boat has been likened to a small child that needs constant attention.

5. Depreciation. In most cases, boats are horrible financial investments. This is especially true with newer and larger boats.

6. Oil and gas. Fuel is certainly the largest operating expense associated with owning a powerboat. All larger sailboats have motors to get in and out of the docking areas.

7. You might have to “park” your boat somewhere. Unless you have a small ski boat, you’re going to leave your boat in the water. This can be very expensive. In some places, you can pay as much as $275 per night, and that rate only applies is your boat is less than 40 feet. Be sure to look into the dockage fees in your area.

8. Storing for the winter. In cooler climates, boats are pulled out of the water, shrink-wrapped and stored on land. Plan on around $2,500 each winter for a 39-foot boat. Most locations will also require winterizing the cooling systems at additional cost. How many months of the year will you actually use your boat?

9. Maintenance. The bottom of most sea-faring boats needs to be repainted each year. Sails require replacing every 5 years or so. Engines require frequent and expensive maintenance. Water is an excellent solvent and seawater is especially corrosive. Boating is rough and expensive things are prone to breaking.

The cost of owning a boat will vary dramatically based on many factors. The most significant factor is size. The cost of acquiring and maintaining a boat increases exponentially as the length increases.

A joke regarding boat ownership states, “The two best days of owning a boat are the day you buy it and the day you sell it.” With wise planning, that joke won’t apply to you. Be aware of the costs, plan for them, and consider them in your final buying decision.

-Tiffany M., Vaughn CPA

Tiffany Vaughn is a Certified Public Accountant and owner of Cents Savvy, a financial services company. Cents Savvy was founded in 2016 in Belleville, Michigan. Cents Savvy offers financial planning, credit counseling, credit repair, credit rebuilding, credit repair services, tax preparation, small business accounting, debt counseling, tax planning, personal budgeting, personal finance, and insurance services. Cents Savvy’s goal is to become your Top Financial Resource! From saving money for retirement, or getting the biggest tax refund, to building and fixing your credit, Cents Savvy will assist you in achieving your financial goals.