The Department of Licensing (DOL) has been registering houseboats as vessels for decades, however, recently, getting DOL to issue registration or title has been very difficult, if not impossible. Some registrations have been sitting in limbo for nearly a year. It was thought this was a result of a significant change to the Licensing system, however, this appears to only be partially responsible for the delays and non-issuance.
Department of Licensing Will Not License Houseboats Without Self-Propulsion
Department of Licensing Decision
The Department of Licensing has made the decision that they will not issue vessel registration to houseboats at the time of sale that do not have propulsion. The basis given for this decision is WAC 308-93-010 (14), which defines a houseboat as follows:
"(14) "Houseboat" means any vessel as defined in RCW 88.02.010(1). For registration and certificate of ownership purposes, a houseboat does not include any building on a float used in whole or in part for human habitation as a single-family dwelling which is not powered by self-propulsion by mechanical means or wind."

This means that at the time of sale, houseboats lacking self-propulsion will need to be treated as personal property and will need to be registered with the King County Assessor's office as Personal Property. King County will consider these houseboats to be "floating homes" for registration purposes.

Our understanding is that if you are currently registered as a vessel, no change will happen until a transfer of title occurs. You will remain a vessel until you sell your houseboat (Floating On-Water Residence).
Houseboats (Vessels)
* Houseboat (Vessel Registration)
* Has Self-Propulsion (>10hp)
* Buyers pay Sales Tax at closing (currently 10.1%)
* Buyers pay Annual Registration Fee
.5% per year of Depreciating Value
*Closes as a Vessel through Marine Title
Personal Property
* Personal Property (King County Tax Roll)
* Does not have Self-Propulsion
* Sellers pay Excise Tax at closing (currently 1.78%)
* Buyers pay Annual Personal Property tax Approximately 1.25% of replacement cost.
* Closes as Personal Property (like a Floating Home) through an attorney or possibly a Title Company (TBD).
Valuation of Personal Property occurs at the time the property is registered on the County Tax Rolls. The valuation method used by King County Assessor's office is based on a formula for replacing a floating home. Factors that are included are age, size, #bedrooms, #bathrooms. Valuations can vary, but realistically, your floating property will probably be valued somewhere between 50% and 75% of its fair market value. Assuming a fairly new floating property in excellent condition, it would probably be close to 75%. Older floating properties will probably be closer to 50%.
Cost Comparison
For cost comaprison purposes, the following breakdown assumes a newer floating property in excellent condition which we estimate will have a replacement valuation of approximately 75% of Fair Market Value.
VESSEL

Sale Price: $400,000
Sales Tax (Buyer): 10.1%= $40,400
Registration Rate: .5% of Depreciating Value


Yr Value Fee Cumulative
1 100% $2,000.00 $42,400.00
2 89% $1,780.00 $44,180.00
3 83% $1,660.00 $45,840.00
4 78% $1,560.00 $47,400.00
5 72% $1,440.00 $48,840.00
6 67% $1,340.00 $50,180.00
7 61% $1,220.00 $51,400.00
8 55% $1,100.00 $52,500.00
9 50% $1,000.00 $53,500.00
10 44% $880.00 $54,380.00
11 39% $780.00 $55,160.00
12 33% $660.00 $55,820.00
13 28% $560.00 $56,380.00
14 26% $520.00 $56,900.00
15+ 26% $520.00 $57,420.00
PERSONAL PROPERTY

Sale Price: $400,000
Excise Tax (Seller): 1.78%=$7,120
Estimated Tax Valuation %.75=$300,000
Property Tax Rate: 1.025% of Valuation

Yr Value Fee Cumulative
1 100% $3,075.00 $3,075.00
2 103% $3,167.25 $6,242.25
3 106% $3,259.50 $9,501.75
4 109% $3,351.75 $12,853.50
5 112 % $3,444.00 $16,297.50
6 115% $3,536.25 $19,833.75
7 118% $3,628.50 $23,462.25
8 121% $3,720.75 $27,183.00
9 124% $3,813.00 $30,996.00
10 127% $3,905.25 $34,901.25
11 130 % $3,997.50 $38,898.75
12 133% $4,089.75 $42,988.50
13 136% $4,182.00 $47,170.50
14 139% $4,274.25 $51,444.75
15+ 142% $4,366.50 $55,811.25
Discussion
Currently, nothing prevents anyone from maintaining their status as a Vessel, however, when selling, you will have the option of either selling your houseboat without propulsion (remove or disable any engines) and becoming Personal Property or "vesseling up" by adding propulsion and selling as a vessel.

From a Seller's perspective, as Personal Property, the buyer pool will increase as the biggest deterrent to purchasing is the requirement of 20% down payment PLUS 10.1% sales tax. For a $400,000 houseboat (average) this means a buyer would need to have $120,400 available cash at closing for down payment and sales tax. The negative impact is that a Seller would now pay 1.78% excise tax ($7,120 on $400,000) at closing.

From a Buyer's perspective, it becomes much easier to purchase a houseboat as Personal Property. As most homeowners rarely stay in their home for more than 10 years, on average, this will mean an overall saving to the buyer. Based on our current estimates, if you hold your property for approximately 12 years or more, Sales Tax becomes less expensive.

General Considerations: Buyers and Sellers understand Property Tax and are familiar with that process. Buying a houseboat becomes a little more like buying a house. Many lost buyers are a result of being shocked with the 10.1% Sales Tax.

A Choice Remains. For those that want to maintain their status as a Vessel it is still possible. Although it is unclear as what constitutes propulsion, we have heard that 10hp is sufficient. Therefore, if you want your property to remain a vessel, you could maintain or add propulsion. It would then qualify as a Houseboat vessel under Department of Licensing regulations. Alternatively, if your preference is to have your property considered as Personal Property, this can be done by simply not having self-propulsion at the time of sale (remove or disable engines).

Insurance considerations: If you own a vessel with propulsion, your insurance may require you to cover that property as a vessel, rather than as a floating residence. This could mean higher insurance costs, but may provide a more robust coverage.
Questions and Answers
Q: I already paid sales tax! Will I have to start paying personal property tax?
A: Currently, this transition will only occur at the time of sale. If you are registered as a vessel with Department of Licensing, you will be able to renew your tabs online.

Q: I am a registered Floating On-Water Residence. Will this affect my FOWR status?
A: No. Once you have registered as a FOWR, you will remain registered with the City. The protections and regulations associated with being a registered FOWR will remain in effect.

Q: How will this affect the value of my FOWR?
A: We believe this will NOT affect the values of FOWRs, however, we feel that the buyer pool for FOWRs registered as Personal Property will be larger because of the reduced out-of-pocket expense at closing.

Q: How much will a new buyer pay in Personal Property taxes? How is that determined?
A: The valuation is a bit complicated but is based on a floating home replacement formula developed by the King County Assessor's office. The value will be significantly less than actual value. A percentage (approximately 1.025%) of the replacement value is charged each year. Similar to new construction, you will not know the exact amount until the Assessor's office provides a valuation.

Q: How long does the process take to complete?
A: We are unsure of the timeline as we only have a sample of one. The Personal Property Account Number was assigned within 24 hours. It was estimated that valuation could take a couple of weeks.

Q: Will I, as the Seller of my property, have to pay Excise Tax?
A: Yes, the seller of Personal Property is responsible for 1.78% excise tax at the time of sale.

Q: Who is responsible for registering as Personal Property?
A: At the time of sale, the current owner should register the home as Personal Property. The buyer would then assume the Personal Property tax.

Q: Will my property still be considered a "vessel" if it is registered on the King County Tax Rolls.
A: No, for taxation purposes, the Department of Licensing considers non-self-propelled houseboats to be "floating homes."

Q: My marina requires proof of registration. Will I be evicted without having registration tabs?
A: No. As Personal Property, you are exempt from being required to have registration tabs. There are currently approximately 30 registered (a carryover from 1990 regulations) that are not required to have registration tabs.

Q: How will this affect lending on my FOWR?
A: Sound Community Bank has stated that they will continue to lend on these as before. They will still require a survey / valuation
Process for Registering as Personal Property
At the time of Sale...
Email personal.property@kingcounty.gov attention Rowena Dutton

Indicate you need to register a floating home as Personal Property and provide the following information...
Owner Name and address
Year built
Condition
Size - Sq Ft
# Bedrooms
#Bathrooms
Contacts
Rowena Dutton
Administrative Specialist II
DOA - Commercial/Business Property Division (CBPD)
ADM-AS-0708
Email: rowena.dutton@kingcounty.gov
Office: 206-263-2358 Fax: 206-296-0107

Lucy M Espinosa
Auditor Appraiser Assistant
Department of Assessments
ADM-AS-0708
Email: Lucila.Espinosa@kingcounty.gov
Office: 206.263.2334 Fax: 206.296.0107

Beverly Hawkins
King County Department of Assessments
Commercial Business Division
Personal Property Section
206.263.2270 (ph) /206.296.0107 (fax)
Email – Beverly.Hawkins@kingcounty.gov

King County Administration Building
500 4th Ave Rm 708
Seattle, WA 98104
Website: www.kingcounty.gov/assessor
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