Houseboat Depreciation: 13 Tips + Examples (With Pictures)

In Boating by Morten Storgaard

If you’re looking to buy a houseboat (or find a boat to convert into a houseboat) you should also consider the depreciation value of houseboats.

Here are the numbers and exactly what to expect regarding depreciation on houseboats!

Let’s start with some basic numbers before we dive into the details:

Type of Houseboat 1 year 5 years 10 years
Converted commercial barge 20% loss 24% loss 29% loss
Trailerable houseboat 20% loss 24% loss 29% loss
Floating homes 10% avg loss per year

Here’s everything you could possibly want to know about depreciation on the different types of houseboats.

Depreciation Basics for Houseboats

Unlike what you see with the housing market, houses will increase in value over the years, but, boats decrease in value.

The greatest part of the depreciation process occurs in the first couple of years and then gradually decreases as the years go on. Depending on where you live, there may be state or regional taxes on your used boat purchase as well.

Floating homes are one exception to that rule. They actually appreciate for the first few years. Self-propelled houseboats (the type built on pontoons and have a motor to move on the water), fall to the regular boating depreciation rule, unfortunately.

Often, floating homes are purchased with a bit of land as well; or at least moorage to go along with the floating home.

Depending on where your floating home is moored, these places may even be worth more than the houseboat itself.

3 Examples of Houseboat Depreciation

1. Converted commercial barge

When it comes to buying converted commercial barge, there are a couple of different options.

You can buy a commercial barge which is ready to be converted for around $3,000,000.

One example is this former cargo ship which was rebuilt by SFR Harlingen in ’03, is a beauty. She is $336,129.75 and has two double bedrooms, a kitchen, a few living rooms, underfloor heating, central heating, a pellet wood burner, double glazed windows, and a hull made of doubled 6mm steel plates.

After you’ve converted her, she’ll be at her peak price, but she will soon depreciate by 20%, leaving her at $268,903.78 only a year after her peak year.

2. Trailerable Houseboats

Trailer-able houseboats cover a majority of different types of houseboats. Plenty of boats fall under this category. The main distinction is that you can live on the boat and that you can also put it on a trailer (even if it is a really big trailer).

The boats considered in this category are:

  • Sailboats
  • Superyachts
  • Catamarans
  • Large cabin pontoon boats

Unfortunately, they all fall under the same depreciation value as the commercial barge. Once you buy her new, she begins to depreciate.

One example of a trailer-able houseboat is this Bravada Yacht Axiom 1665:

Brand new, she is $39,000.  However, once you buy her and take her off the lot, she will drop to $31,200.

 

3. Floating Home

The difference between a floating home and other types of houseboats is its inability to be self-propelled. There isn’t a motor attached to a floating home.

It is kept/moored at a pier or dock and will stay there unless its owner finds a tugboat to move it.

One example is this single-family floating home in the community of Eastlake located in Seattle, Washington:

It has two bedrooms, two bathrooms in 900 square feet, and is brand new (built in 2019). As of July 23, 2019, it had only been on the market for 43 days. It is valued at $749,000.

Since floating homes raise in value by an average of 10% each year, this home will potentially be worth $823,900 next year.

 

Depreciation Summary:

The depreciation value of mobile houseboats follows the same type and rate as the depreciation of a vehicle. However, floating homes (which are also considered houseboats) appreciate in value.

If you’re looking to buy a houseboat as an investment, consider buying a floating home.

But, if you’re looking to live on a houseboat for the joy of being on a mobile houseboat, just know of the average depreciation value before you buy one.

That number can be a difficult pill to swallow if you’re not aware of it.

The percentages and numbers in this article are an average of the trends at this point in time. However, the market is constantly changing, and the prices of houseboats vary depending on its quality, size, and other factors (depending on the houseboat).

Remember that houseboats can range from $30,000 to $500,000 depending on what you want and need from a houseboat.

 

7 Tips To Increase the Resale Value on Houseboats

Everything will eventually decrease in value and depreciate.

However, you can slow down the process (and maybe even increase its value) with some practical maintenance and upkeep.

 

1. Make sure you’re regularly maintaining the exterior paint on your boat.

Houseboats are always in the water. Because of that, the exterior of your boat is susceptible to things like mold, algae, rust, and is constantly in contact with impurities.

Performing some maintenance on that exterior paint about once a season is a good way to avoid corrosion. This is a task that will help improve the integrity of your houseboat and will also help it’s outward appearance.

 

2. Refurnish and remodel the interior of your boat with classic and quality pieces.

When you furnish the interior of your houseboat, or if you are planning on mixing things up and refurnishing (or remodeling), consider sticking to classic pieces. Choose clean, classic pieces made with high-quality wood or leather upholstery. If you stick with a few definitive pieces that aren’t overly trendy.

This will keep you from having to keep upgrading your interior when the trends change.

Remember that the purpose of your houseboat. Did you buy it for relaxation and to get away from the craziness back on land? If so, consider the types of fixtures and furniture which feel calming to you?

Clean lines? Dark wood? Light wood? Something easy to clean?

 

3. Consider hiring a professional cleaner every once in a while.

Of course, you can always clean your own houseboat but, every now and then, consider hiring a professional property cleaner to give your houseboat a much-needed sprucing up.

There are always corners, nooks, and crannies that get overlooked.

Professionals know how to get into hard-to-reach places.

 

4. Check for repairs that need to be done before you get your houseboat appraised.

Make sure you double-check your entire boat before you invite your agent over to appraise your property. Look into any creaky floors, chip away old paint and repaint what needs to be repainted.

Look for signs of leaks or flooding, and take care of those before anything else.

Also make sure that you look for mold.

Do all of your repairs in advance before your agent comes over. This will make sure that you get the higher price you want.

 

5. Have some high-quality upgrades which won’t break the bank.

Not every single upgrade to your houseboat is going to cost you an arm and a leg. There are some great inexpensive options that you can add to your boat each month or season.

If you are fond of working with your hands, doing these small upgrades yourself will also save money.

Otherwise, hire a professional to do the installation for you.

For example, look into adding a bit of special tiling to your bathroom and/or kitchen counters or backsplashes. Look into adding or upgrading some doors and door frames. Change up the small pieces of hardware in your kitchen (knobs and handles). Look into making your cupboards other storage units cleaner and more organized.

 

6. Think like an interior decorator.

Consulting an interior decorator or designer is a great way to find out what your ideal style is, in order to create a sense of cohesion in your houseboat. Often, we will find random pieces of furniture at the store and bring it all aboard.

Because we like it, it’ll all go well together, right?

Wrong.

As an example, you might like the look of minimalism (nice clean lines with everything in its place, no clutter, often with the use of lighter/brighter colors, and perfect organization) but also find aspects of steampunk interesting (vintage furniture with a flourish of Victorian, with dark woods and paint).

While both of those designs might appeal to you, they don’t often work well together.

When discussing this with an interior decorator, their professional opinion might show you “modern industrial design elements”, which can bring aspects of minimalism with the elements of industrial/steampunk-like flourishes.

Finding an interior decorator or designer will help you find the perfect solutions for your space. They can even help with storage and with finding deals in your area, for certain supplies and fixtures.

Make sure that you’re honest with the professional decorator so you will end up with a plan of action that is both functional as well as appealing to your sense of style.

 

7. Don’t skimp on or forget houseboat insurance.

Make sure your houseboat is covered by a plan in case there is a disaster in your area. For example, within the last month, there have been multiple earthquakes in California.

If you had a houseboat in the area, you would want to make sure you had insurance to cover any damages that might occur from that.

If you are looking to sell sometime soon, this will also give your potential buyers assurance that the houseboat is fully covered and that damages will potentially be minimal if something catastrophic happens. Believe it or not, insurance actually adds to the value of your boat.

What does “depreciation” mean, anyway?

Before we talk about the depreciation of houseboats, let’s break it down by definition. What does “depreciation” mean? The most common definition of depreciation refers to the reduction of the value of an item after time.

Most of the time this has to do with the regular wear and tear of the item, excessively or not.

If you bought the houseboat to use as an office or for your business, you may be able to itemize a portion of the cost of the houseboat (and the maintenance/utilities needed to work within the perimeter of the property) on your taxes.

The IRS laws on depreciation are as follows:

  • You must own the property.
  • You must use it for your business or the activity in which you produce income.
  • The houseboat must have a “determinable useful life.”
  • It must last more than a year.
  • It can’t be “excepted property”. According to the IRS.gov website (https://www.irs.gov/taxtopics/tc704), this is defined as property which includes “certain intangible property, certain term interests, equipment used to build capital improvements, and property placed in service and disposed of in the same year. “

 

What types of houseboats are there?

There are generally two different types of houseboats, though that number may be controversial to some.

  1. The first type of houseboat is a converted commercial barge. These are pretty self-explanatory. Either a company or a boater, has taken a commercial barge and has converted it into a houseboat.
    These barges (since it is built to withstand a lot due to its commercial background) are usually pretty sound and sturdy.
  2. The second type of houseboat is a purpose-built pontoon. These types of houseboats were engineered to be houseboats. They are built on a pontoon base with a motor.

The Biggest Floating Home Communities

Portland and Seattle are two places with large floating home communities, probably due to the temperate weather, the environment, and a large amount of water surrounding the areas.

The movie, “Sleepless in Seattle” even featured a houseboat. That one, in particular, was a real floating home which was built in 1978. It was put on the market in 2008 for 1.2 million dollars. It sold in 2014 for over $2,000,000. Talk about appreciation.

It has more than 2,000 square feet, which makes it one of the largest floating homes on Lake Union. There are some other wonderful floating homes in Seattle and they are mostly (significantly) less expensive than the $2,000,000 Sleepless in Seattle home, and most of the regular housing as well.

If you’re looking for a floating home or a houseboat that will yield a bigger return than a regular home built on a foundation, consider looking into a floating home.

This, of course, depends on the type of fixing which is required to put the home on the market again.

If this interests you, check with a yacht broker to see what the returns would be considering the current trends in yacht ownership in your area.

A real estate agent would be able to answer a few questions in that regard as well.

Final Thoughts:

When you look into different brands and types of houseboats, you’ll find that there are aspects that are different with each boat, within the same category of boat. The similarities normally lie in the motor size, the size of the boat, the shape of the boat, and the various accessories it will come with.

The differences are mostly cosmetic but can add to the depreciation of the boat: color, trim, seats, etc.

I would advise you to take your time while you are choosing a boat. After all, you need to be able to do the appropriate amount of research. There is so much to consider. New or used? Power/motorized or floating houseboat? Smaller superyacht or a catamaran?

What do you want to do with the houseboat? How many people will be spending time on it on a regular basis?

Self-propelled houseboats depreciate at a similar and reasonable rate as long as all of these factors are maintained by the owner. If you’re planning on buying a houseboat, make sure you take care of it in order to retain the value of it, when you end up selling it.

Great Rule of Thumb

Unless you’re talking about a floating home, the rule of thumb for boat depreciation (including houseboats) is this:

You’ll depreciate about 30% within the first five years and on until you hit about $100 per foot of boat.