Living Aboard and Taxes

One of the seldom discussed topics of living aboard is taxes. When you live and work in the United States, you need to pay state income taxes, federal income taxes, and property taxes, along with any other taxes that apply to your local area. Living aboard really simplifies things, you own no property and are therefore not subjected to any of these kinds of taxes.

As a liveaboard, the only taxes you need to pay are your state and federal income taxes. No other taxes apply to your boat, as it does not own the water that it floats in, nor does it have to pay for the municipal budget of the town it is closest to.

I lived in Maryland during a period of time when the state governor was on a tax rampage! Martin O'Malley was creating all sorts of new taxes which added lots of expenses to all the land owners in the state. One of his famous and controversial taxes was nicknamed "The Rain Tax" which taxed people on the square footage of their property that is not greenery. The idea was well grounded, but the implementation of the idea failed miserably.

The reasoning for this tax was simple and logical. Paved areas do not absorb water and add to runoff. This runoff then has to be managed as it ends up in the Chesapeake Bay. This runoff tends to carry a lot of sediment and debris which pollutes the bay and damages the delicate ecosystem which lives there. 

If someone owns a large piece of property which is covered in green plants that absorb rain water and then builds a large house with a huge driveway, tennis courts, and paved walkways, this land will no longer absorb as much rain water and will lead to more runoff. This runoff needs to be managed to reduce its effects on the bay, and this management costs money. The plan was to tax landowners based on how much of their property will not absorb rain water and use these funds to build and maintain water treatment facilities. 

The road to hell is paved with good intentions, and this tax went right there when the money collected never reached its intended target. Instead, the money collected was used to cover other state deficits. 

While people on land were complaining about all the new taxes that were being tacked on to their properties, those on boats were un-phased as we kept floating along without any taxes, other than income tax. 

Large cities tend to have added taxes, known as "city tax" for those who live within the city limits. The land owners in the cities pay a lot of money for a small property which is heavily taxed. Large cities also tend to be built around old ports, and old ports means deep water for boats to float in!

Living aboard in a marina in the heart of a city will not subject you to these added taxes. All you need to do is pay your slip fee and enjoy living in the heart of the city for very little money!