Breaking Down the Cost of Boat Ownership

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Breaking Down the Cost of Boat Ownership

Are you interested in buying a boat soon? It’s one of the best ideas you’ll ever have. The memories you’ll make, the fun you’ll have, and the connection with nature is all worth it. Whether you are buying a boat that the whole family can enjoy or a personal boat for fishing, you’ll never regret it.

But the price tag on your dream boat is not the only cost of boat ownership. There are quite a few other expenses, some upfront, and some ongoing costs, you’ll need to be aware of before bringing your new boat home.

So what are those costs? And is getting a boat actually worth it? We cover all of that below.

Reasons to Buy a Boat

There are a million reasons to buy a boat. Everyone has their reason, and there are different types of boats for different people.

Many would-be boat owners want a boat for their family. They have kids at home and they want to create special memories while they are still little.

A boat in the summertime is the perfect way to get kids outside, away from electronics and enjoying the natural world. Give them a reason to fall in love with the outdoors and they’ll have a passion for the water the rest of their life.

Others buy a boat specifically for fishing. If you are a serious angler, fishing from the shore or pier gets old. A boat gives you access to the best fishing spots, both on freshwater and saltwater.

Still, others look for a boat to entertain; family, friends, and coworkers always love an invitation to spend time on a party boat. Boats can be outfitted with speakers, refrigerators, wet bars, and more for a weekend well spent. 

When it comes down to it, everyone agrees that boats are an incredibly fun way to spend time outside. They promote a healthy lifestyle and provide a fun hobby that you can share with others.

The Cost of Boat Ownership

So as you start your search for your dream boat, there are quite a few things to keep in mind. Boats cost a considerable amount of money on an ongoing basis. Here’s what to expect.

Sale Price of the Boat

Your first transaction will be the most obvious one; buying the boat. This cost ranges dramatically depending on your goals and preferences.

You can buy used boats for as little as $500, or you could buy brand new, top of the line luxury models for over $100,000. The sky is the limit in terms of boat variety.

The average cost of a boat is between $30,000 and $50,000.

Boat Financing

Of course, you can pay cash for your boat. If you are buying a used boat, then that might be your only option, unless it’s from a dealer.

Most people finance their new boat. This makes it much more accessible to get a new boat and start enjoying it right away. The easiest way to do this is financing with a boat dealer.

Boat loans can also vary. The length of the loan and the purchase price will determine your interest rate and monthly payment. 

You’ll likely put a 15% down payment on your boat (the standard down payment for boats). Interest rates are generally 4% to 10% with lower rates available to larger loans and shorter payback times.

Boat Sales Tax

You may also need to pay sales tax on your boat purchase. You should only need to pay sales tax in the state you bought the boat in.

States such as Rhode Island and Delaware have zero sales tax on boats. North Carolina requires a 3% sales tax on boats but is capped at $1,500.

Florida has a sales tax equal to 6% of the boat’s purchase price. So a $20,000 boat would cost $1,200 in taxes. 

Texas has a 6.25% tax. Make sure to research your state’s boat tax rate. If it’s high, you may look to purchase an out-of-state boat.

Personal Property Tax

In most areas, you’ll also need to pay personal property taxes on your boat. This is required annually. 

The tax rate is based on the assessed value of the boat each year and varies by jurisdiction. 

In Richmond, Virginia, for example, the rate is $3.70 per $100 of assessed value. A boat valued at $20,000 would incur a $740 annual tax payment.

In Norfolk, Virginia, the tax rate is $0.25 per $100 in assessed value. A $20,000 boat would cost $50 in taxes each year. Check the personal property tax rates in your city or county before purchasing a new boat.

Boat Registration

Your boat needs to be registered with your state just like your car does. This usually needs to be completed within 30 to 60 days after buying your boat.

The rate varies by state and by the length of the boat. In most states, you’ll pay between $50 and $250 to register your boat. 

In Florida, a boat between 16 and 26 feet long costs $26.75 to register, while a boat that is 40 to 65 feet long is $127.75.

You can also feel good about this cost, as fees from boat registrations help to preserve waterways, making them more enjoyable for you to use. 

Boat Insurance

Insurance on your boat is very important and very affordable. Only 2 states, Arkansas and Utah, actually require boat insurance. 

However, if you plan to dock your boat at a marina, you may be required to have insurance. Also, if you are financing your boat, your lender will also require you to have insurance.

The average boat insurance cost is 1.5% of the boat’s value. So again, if your boat is valued at $20,000, insurance would cost about $300 per year.

States along the coastal US, such as Florida, Texas, and California, generally have higher rates than middle or northern states. A large number of boats in coastal states operate on the ocean and are usually larger and used year-round, resulting in higher insurance fees. 

There are ways to receive discounts. You may be able to bundle boat insurance with your other policies, such as home and auto, to receive a discount. 

Those who have zero accidents and those who pay their insurance bill upfront, as opposed to monthly, will generally receive a better rate as well.

Boat Trailer

You’ll more than likely need a boat trailer if you plan on using your boat in different places, or if you store your boat at home. 

Trailers can range from about $300 used to over $2,000 new for larger trailers. Once you buy a trailer, you’ll also need to register it with your state.

Rates and requirements vary by state. Some states don’t require registration if the trailer is under 2,000 lbs. 

Docking Your Boat

There are many options for parking or storing your boat when you are done for the day. Marina’s are locations on the water that offer boat storage options.

Many have docks that allow you to fasten your boat to, which are easy to access. You simply park at the marina, walk out to your boat, unfasten, and embark.

Sometimes your boat is moored, which is similar, though your boat may or may not be secured to the dock itself, but another fixed point. 

Some marinas offer dry storage. High and dry storage includes a large warehouse with rows of tall boat rocks. Boats can be stored 3 or 4 levels up and accessed with a specialized forklift. 

In the case of foul weather, this is the safest option for your boat. However, you’ll need to rely on staff members to get your boat in the water for you. You might be able to call ahead so it’s right to go when you arrive.

You can also find boat yards near the water that will store your boat dry outside. These are generally less expensive than marinas. 

The accessibility of your boat and the size of your boat will affect the cost. For smaller boats stored outside, you could spend a few hundred dollars per season. Larger boats or those stored inside may cost over $1,000 per season.

Winter Boat Storage

For those in colder climates, you’ll want to properly store your boat so it safely makes it through the winter. To start, you’ll want to clean the boat.

You’ll also want to clear the engine, add a fuel stabilizer to the fuel tank, drain the plumbing system, and add antifreeze.

You’ll also want to cover the boat. The best way to do this is to have a professional shrink wrap the boat. This provides the most protection. 

After winter, you’ll then need to de-winterize the boat. A boat storage facility may be able to take care of all of this.

You’ll want the boat stored inside if possible. The total cost for winter boat storage could be $2,000 or more per season. 

Gasoline

Different types of boats use different amounts of gas. A speed boat can use as much as 20 or 30 gallons of fuel every hour. A slower pontoon boat can use as little as 5 gallons per hour.

Due to water resistance, boats use much more gas than cars. Small boats may be able to utilize standard gasoline. Gas at a marina may cost more than gas elsewhere.

If you plan to cover large distances or use your boat frequently, gas can really add up. This is one of the biggest benefits of owning a sailboat; it’s power by the wind.

Maintenance and Cleaning

To keep your boat running season after season, it’s up to you to maintain it. There’s a lot to do. 

The more time spent moving through the water, or store in the water, the more frequently your boat will need to be cleaned. Both the hull and the deck need to be scrubbed. 

Boat experts estimate that new boats cost as much as 2% of the purchase price to maintain each year. For used boats, it’s estimated you’ll spend 10% of the purchase price on annual maintenance costs. 

Safety Equipment

You’ll want enough life jackets on board for every person that can fit aboard. 5 adult life jackets can cost upward of $350.

Your boat needs to have a throwable flotation device as well. This can be a ring buoy or a seat cushion. Make sure it has a rope attached in the event you need to pull someone to the boat. These can cost between $15 and $100.

Keep a safety kit on board as well. This kit can include a horn, flares, fire extinguisher, medical kit, and other important items which will prove useful in an emergency. A kit will cost about $150.

Additional Equipment to Keep on Board

A responsible boater should also keep the following equipment on their boat as well; 

  • YHF radio
  • Backup paddles
  • Anchor
  • Bailing device to remove water
  • Knife
  • Flashlight
  • Snorkel mask in case you need to inspect the underside of the boat
  • Diver down flag

There are many other things you can add to your boat but aren’t required. This could be a stereo system, fish finder, fishing rod holders, a mini-fridge, and many other potential upgrades. All of these items will cost extra.

The True Cost of Boat Ownership

As you can see, there are a lot of costs associated with boat ownership. But that shouldn’t scare you away.

Remember, many of these costs are dependent on the size and price of your boat. Your ongoing costs for a $100,000 boat will be much more than the ongoing costs of a $20,000 boat.

If you opt for the $20,000 boat and pay cash, you could expect to spend between $25,000 and $30,000 your first year. This includes all of the upfront costs, such as equipment required, registration, sales tax, and a boat trailer.

After that first year, you may spend between $4,000 and $6,000 per year, or between $333 and $500 per month to own and operate your boat.

For many would-be boat owners, $500 per month is much more doable than they may have thought. If you finance the purchase price, your monthly cost will be higher, but you’re upfront cost much lower.

When Are You Getting Your Boat?

Boats are an option for most people. No, that doesn’t mean everyone can afford to own the superyacht. But the cost of boat ownership doesn’t have to be outrageous.

If you truly love being on the water and you hope to create special memories for years and years, buying a boat is possible and worthwhile.

Need help deciding which boat is right for you? Check out this post to start your boat buying journey.