Was a non-self-propelled houseboat subject to use tax as a vessel?

Plain-English summary

A purchaser bought a houseboat described as a house built on a boat hull. It was not self-propelled and could move only by towing.

Counsel said the lack of an engine did not prevent vessel status. Barges could also require towing and still give rise to tax. The houseboat's required registration with the Department of Harbors and Watercraft further indicated that the Legislature intended it to fall within the vessel use-tax rules.

The letter therefore concluded that the houseboat purchase was subject to use tax. It noted that counsel knew of no court decision deciding whether a registered houseboat was exempt under the then-current Sales and Use Tax Law.

What this means for you

Buyers of nonmotorized floating homes

No engine did not equal no tax. Ability to move by tow and vessel registration supported classification as a vessel.

Accountants and tax professionals

Check hull design, towing capability, attachment to land, registration, legal ownership, and current agency rules. Later floating-home guidance may add a permanent-annexation inquiry.

Common questions

Q: Did the houseboat have its own propulsion?

A: No.

Q: How could it move?

A: By towing.

Q: Did that prevent vessel status?

A: No.

Q: What tax applied?

A: Use tax on the purchaser under the letter's facts.

Citations and references

• The letter relies on the historical vessel use-tax provisions and registration by the Department of Harbors and Watercraft without citing a section number.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 585.0080
• Original supporting opinion: 585.0080 PDF

Original ruling text

STATE OF CALIFORNIA

585.0080

STATE BOARD OF EQUALIZATION
April 27, 1967

Dear Mr.
Your letter of April 19, 1967 to Mr. L. S. Roberts was referred to this office for a reply. We understand that "K" purchased a houseboat, which you describe as a house built on a boat hull. There is no specific exemption in the law that excludes from use tax liability the sale of houseboats. The fact that it is not self-propelled is not controlling. Many barges, for example, are not self-propelled, but sales of them give rise to tax liability. One could build a house on a barge and call it a houseboat. It could only be moved through the water by towing, but still it would be subject to use tax when sold. We note that the houseboat is subject to registration by the Department of Harbors and Watercraft. This would indicate, in and of itself, that it is the type of vessel the Legislature intended to be included in the law relating to use tax on purchases of vessels. We do not know of any court decisions on the question of whether a houseboat required to be registered by the Department of Harbors and Watercraft is exempt from use tax under the present Sales and Use Tax Law. It is our opinion that "K"’s houseboat is subject to the use tax.

Very truly yours,

Robert H. Anderson
Associate Tax Counsel
RHA:dse [lb]