All Things Considered: The Pros and Cons of Buying a Floating Home

by Carson BuckMay 17, 2017

Floating Homes: The New Trend in Homeownership?

These days, with tiny homes all the rage across the country, more and more people are opening up to the possibility of alternative living conditions, including buying a floating home. Remember, a floating home is not necessarily a houseboat, even though these terms may be used interchangeably and are often confused with each other.

A floating home need not be sea-ready, but it is just what its name suggests: a home that floats (mainly on a dock). The definition of a floating home is one that is permanently moored and cannot move under its own power, unlike a houseboat. If you’ve been considering making the move to a floating home in the near future, read on to learn more about the pros and cons associated with this style of homeownership, to see if it’s right for you.

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Pros: Advantages to Buying a Floating Home

One of the biggest advantages to buying a floating home should be obvious: unlike houseboats, they don’t need a motor or method of self-propulsion. You can build upwards or outwards without affecting the cruising ability, since all it needs to do is float. You can also save on locomotion costs like gasoline because you’re not powering around the lake, marina, ocean, or sea.

According to one outspoken blogger, joining a floating home community can be an extremely enjoyable experience. Not only do neighbors tend to know each other better being so small and in such close proximity, but there’s also a general feeling that they need to take care of each other and their neighbors’ property when not at their “home sweet floating home.”

And for nature lovers, you can also have gorgeous sunrise and sunset views out on the water, or spend time watching local animal wildlife right from the comfort of your front “porch,” or boat deck. Sure, you may be able to buy a land-locked home that comes with a pool, but how much fun is that, comparably speaking? With a floating home, you’re afforded the luxury of jumping into the water any time you feel like, making cooling off in the summer time an easy enterprise.

In some states, owning a floating home does not technically constitute owning “real property,” and as such, there may be no property taxes associated. Some states instead consider a floating home to merely be “personal property,” and require a minimal annual personal property tax be paid. More on taxes later in the article.

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Cons: Hidden Costs of Living on the Water in a Floating Home

Unfortunately, in this day and age, there’s a cost to everything, including living mainly on the water. Further, you may find it difficult to find dock space if you’re planning on just buying a floating home that is not mobile. Real estate openings can be quite scarce on the water as well, so there are fewer “neighborhoods” to choose from and less inventory to consider when buying a floating home.

Floating homes can also rack up quite the monthly bill between mooring fees and monthly electricity, water, sewage, and other utilities. Think about it as your house or RV, floating on the dock of the bay.

Other practical concerns that potential owners should consider include seasickness, motion sickness, weather, wind, and other extreme climates, which can all damage homes (and homeowners) that are not prepared. The water surrounding your floating home may also need to be tested regularly for things like E. coli.
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Fees and Property Taxes May Vary Widely

Now here’s where things get a little tricky. Tax rules vary widely from state to state, county to county, or even lake to lake, so it’s wise to do plenty of research before deciding to buy that quarter million-dollar floating home. In Nevada, for example, houseboats and floating homes aren’t subject to property taxes since the State believes you pay enough for the sale (there’s heavy sales tax on houseboats and floating homes) and anchoring space on the dock.

Remember that IRS, Federal, State, and County laws change all the time. The best advice is to talk with your Realtor or real estate agent about the various taxes and fees that may come along with floating home ownership. Be aware that the moorage slip fee you pay per month can increase quite dramatically, just like rent. Be prepared to go without storage or close parking spaces, and to deal with potentially treacherous conditions during fall and winter, depending upon where you live.

Can I Deduct a Floating Home From My Taxes?

If you’re thinking about buying a floating home, just like buying any other home, you should think about exactly where you want to live, and don’t rush into the decision. Consult a real estate agent, accountant, and potentially an attorney before making the giant leap into floating home ownership.

If this is your main residence or second qualifying home, you may be eligible for a mortgage interest deduction. According to H&R Block, in order to qualify, the floating home or houseboat needs to have sleeping, cooking, and toilet facilities all located on board.
All in all, taxes or fees shouldn’t govern where you live, but they should definitely be taken into consideration. Weigh these pros and cons first, to see if floating home ownership is right for you, and maybe you’ll end up living out on the water!
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About The Author
Carson Buck
Carson is a real estate agent based out of the Phoenix area. In this day and age of online research, Carson loves interpreting data and market research in order to make sure his clients have the best possible chance of finding and successfully buying the home they love. He is passionate about seeing that the buying process is as smooth as possible, and claims that there is no better feeling than handing over the keys to a new home.