What is “Use tax”??

…and how does one pay it??

According to the California Franchise Tax Board:  “You may owe use tax on purchases you made from out-of-state or Internet sellers.Use tax is similar to the sales tax paid on purchases you make in California. You may report use tax on your income tax return instead of filing a use tax return with the State Board of Equalization.”

In other words…

It’s sales tax, but if you pay after your point of sale they rename it to “use” since you’re now using the item purchased.  Sales and Use tax are monies owed to the state in which you reside after you make a purchase.  In California, we pay the Board of Equalization in Sacramento…sounds enchanting!

For me it applied to me paying tax on my boat after it became a documented vessel with the U.S. Coast Guard.  If I registered my boat with the CA DMV I would have been required to pay the “sales” tax right away.  BUT, since I had my boat documented it took about 4 months for the paperwork to go through (thanks government), which bought me some time to pay the now renamed “use tax”.

I struggle with these sorts of things, but I think I figured it out.  The tax (for me) needs to be paid to the state of California.  The rate is 8% of my purchase.  There is an option to do everything on line, but I got overwhelmed so I called to speak to a service rep and went from there.  Her name is Terry and she’s very helpful.  Here’s what I did;

  1.  go to http://www.boe.ca.gov.
  2. search for the “401 cuts” form, print it out and fill it out.
  3. make a copy of the bill of sale
  4. make a copy of the documentation certificate

I don’t have the full amount owed so I asked if I can set up a payment plan.   Since I took it upon myself to pay the tax (referred to as “voluntary”), I have a better chance at getting a payment plan.  If I waited until the state sent me a bill, then I may owe the full amount plus fees and interest immediately.

For the payment plan I went to the same website, searched for and printed form “boe126”.

I mailed all of the forms and copies along with a check for the amount proposed as an installment.

There are stipulations and guidelines that seem very confusing to me.  Like this one which is from the Board of Equalization regarding when to pay for a documented vessel; “The return must be filed and tax paid by whichever period expires earlier, 1.On or before the last day of the calendar month following the month in which a return form was mailed or presented to you by the BOE -or- 2 The last calendar day of the twelfth month following the month in which the vessel was purchased if you did not receive a return from the BOE.”

I figured if I just initiate the payment process when I get my Coast Guard documentation I’d be in good shape.  Keep your fingers crossed.

 

See you at sea!

-Eileen

 

 

 

 

 

I changed my header!

Just an FYI…I changed my header/blog name from “eiboat” to “The unlikely liveaboard”.  Eiboat was the first two letters of my name and the word boat…yup, that’s about all I came up with back when I started.  I figure the new name gives more of an idea of what I’ll be typing about.

Almost 3 months in…

Some days I think I’m a crazy person and have made a horrible decision.  What kind of person decides to live on a boat??  Then there are days that I absolutely love it and can not imagine going back to living on the land.  I have moments of panic thinking “people don’t live on express cruisers”, and that I should have stuck it out for a sailboat.  However, it wasn’t in the cards at that time.  I had to live somewhere.  And as a person with no day to day sailboat experience, it’s a better decision to buy a newer cruiser and ease into the nautical life.  For me at least.

I’m not a “full time” live aboard as I do spend time at my boyfriends house.  He comes to the boat a couple nights, I’ll be here by myself a couple nights, and then I go there a couple nights.  I call my boat home and prefer to spend my time here.

There has been a bit of adjusting.  It only took a few days to figure out how to ninja and matrix myself around so I don’t trip and fall or just crack my head off something.  Deciding which berth to use as my main bed took a couple weeks.  I’m still sorting out how to fit everything in here and not have a mess.  I’m still learning to be comfortable in such a small living space.  My boat is 30ft at the waterline with an 11ft beam, so 330 square feet (right?).  I have a full canvas enclosure for the cockpit/back area, which is fantastic.  I can use that section as my living room as soon as the weather gets just a few degrees warmer.

I have everything a land dweller has; computer, internet, tv (no cable, haven’t had that in over a decade), stove, microwave, sink, fridge, queen sized bed, couch, table, sewing machine (yup), bathroom, shower (needs to be repaired) and so on.  I actually have a bit more since I am allowed to use the hotel amenities…score!!  Vending machines, gift shop, tennis courts…oh, and the pool.

I do feel very overwhelmed at times.  I didn’t grow up around boats…or sailing, or even near a nice body of water.  I had to drive an hour to get to the jersey shore, and that was just a day trip or weekend adventure.  My lack of knowledge of boating makes me feel like I’m damaging the boat.  Having just spent almost $5k to rebuild an engine I hope not…  I’ve bought a few books about electrical systems, and how my engines work.  A lot of that seems like a foreign language, or I just get frustrated and don’t retain anything.  But I’m trying.  I’m learning, even if it’s a little at a time.  For example, I now know that a stern drive boat doesn’t have a rudder.  I also know how sacrificial anodes work.  Which reminds me…ahhh, always something to do!!

The short story is that I live on a boat which I own (as soon as the bank says so) and I’m not dumping money into a rental.  I’m learning a little every day.  I’m spending quite a good bit of money, which I hope will benefit the functionality of the boat.  I can move a hell of a lot easier than anyone else I know.  I’m in San Diego, on the water, across from the beach (and an ice cream shop).  And I am looking forward to all of the adventures ahead!

Here are some recent photos:

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my anodes…

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the funky shaped v-berth

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this is my lovely pathway to the marina

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a photo off the bow during one of the storms

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maiden voyage! not the best placement for the surfboards

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my awesome touchscreen. 3 miles out for the christening

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yes drinking and driving is bad, but it was for the maiden voyage/renaming toast

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the new name! in star wars lettering

Thanks for stopping by, hope to see you at sea!

-Eileen

I’m afraid of my boat….

Not exactly afraid “of” the boat.  I’m more terrified by the fact that I have no idea of how boats work.  I’m fairly certain that every noise is a direct result of my nautical ignorance which will immediately result in the boat meeting her demise.  As I settle into bed I hear something kick on.  Do I look?  What exactly am I looking for?  And what on earth do I do if it looks “wrong”??  Who do I call?  (Ghostbusters, clearly)

I think I’ve identified one noise as the fridge just kicking on to cool itself.  Is it kicking on too often?  Do I have it set right?  Am I using too much power?  How much power is too much?  And why is that light on that box over there red?

I know it’s hard to believe, but on land I’m actually a fully functional adult.  Seriously!  I can dress myself, turn lights on and off, make and eat a sandwich, open and close an umbrella…I can even hold down a job!  Yay me!  I have an obscene amount of things to learn about the boat.  With every sound I hear as I try to fall asleep I can’t help but have the feeling that I may wake up a few feet lower in the bay.  Just keep floating!

The toilet flushing is one of the most unsettling sounds I’ve heard.  It’s like a chainsaw got stuck in some huge tree and is trying to break free.  Then the water pump…or at least what I think is the water pump.  I’m crippled with the fear that I’m doing everything wrong and slowly destroying the boat.

One day at a time…keep on floating…

See you at sea…I hope…

-Eileen

A little bit about the paperwork…first, the money part.

 

Buying a sailboat is a lot like buying a house.  Paperwork, signing, notarizing, crying, hoping, last minute corrections…waiting…waiting.  When I decided to buy a boat as my home I first thought that I could get a home loan for about $50k.  That would get me a nice sailboat, right?  Nope.  Doesn’t work that way.  The banks are smart and don’t just throw money at people who want don’t want to keep up with the Jones’.    Here’s a little summary of my financial escapade:

First attempt at a loan: the credit union (and Chase)

My initial inquiry for a loan was at my bank Chase…almost immediately they responded with “we don’t really do those types of loans”.    So I went to a local credit union and asked for a loan.  At that point I think I was only looking for $15k.  My credit score was over 700, and I was feeling pretty positive.  I remember, the bank was in between buildings and had a temporary office in a trailer.  Surely they’d give me money.  That only took their underwriters about 2 minutes to say “no”.  Well, that was devastating.  What do I do now?  Where will I live?  This is horrible.  This will never work out.  My job is the problem.  My student loans are the problem.  WHY IS THE WORLD AGAINST ME????  The very patient banker gave me some suggestions which would help me get approved if I’d like to try again in a couple of months.  But paperwork and facing the reality of my financial history scares me, so I just complained about how awful America is for forcing me to go to college and take out huge loans (not 100% true, but I was mad).

After the crazy settled…I kept on with the hunt.  And after a number of fruitless craigslist boat viewings, I found a yacht broker.  *Gasp*…that’s not avant garde and off the grid at all!!  Yachts are for rich snobs and sailboats found in a whimsical fashion are for people like me….I’m arty damn it!!  Actually, this was the BEST decision I made.  My broker Jason  explained everything, found the boats, showed the boats, asked the questions, inspected the boats, and so on.  As we found another boat, he referred me to a bank which specializes in boat loans…for the entire country…it’s pretty much the only one that will loan for a liveaboard.

Second attempt at a loan: Essex Credit

I gave them a call…all excited to take out a big loan.  I believe this attempt was for the 40ft Irwin sailboat…which I insisted would be mine.  Here we go again, almost a year after the first try.  The last credit inquiry should have fallen off by now.  My credit score was about 730-740.  All my bills are paid on time.  This is going to happen.  I’ll be sailing in no time!  Before he even ran my credit we had a very “here’s how it works” conversation.  Since the boat was a 1981 , I’d need 30% down.  Ouch.  Don’t have it, why run it?  Back to the drawing board.  Again.  Say goodbye to the Irwin…which in hindsight I’m happy about…it was named the Eagles Nest, you know, Hitlers secret mountainside hideaway???

With this information I was able to have a goal for the potential down payment and realistically know what boats I should consider.  Enter the motorboat option.  I was reluctant…but let’s be serious; I have only taken 6 sailing courses, never sailed alone, I’m not exactly a princess but I’d like some nice things in my home.  I’m not traveling the globe, I just want a nice option for a home close to my job.  I got a little carried away after following a bunch of sailor blogs and watching the sailing lifestyle channels on youtube.  My goal right now is simple : lower my overhead so I can pay down/off my student loans, own something rather than keep renting, have my own space, and learn!  Throw in some trips to Catalina and we’re golden!

The actual loan

I had finally found a boat, a Searay.  I think we settled around $29k.  I sold my car to help with the 30% down.  I was all ready to go.  I got approved…Hooray!!!  It would be tight, but I had enough to squeak by.  This boat fell through after the survey came back showing the boat needed about 17K of work .  Down in the dumps again.  I was determined though.  We quickly found a similar but newer express cruiser; a Bayliner Ciera in the same price range.  Sweet!  All I have to do is change the details of the loan and I’m set.  Sort of.  When the lender decides on what they will give you for your loan, they actually research the boat.  They don’t just give you what you and the buyer have agreed on.  The lender looks up what the boat is really worth and what similar boat have been sold for.  My initial loan was for $29k.  They would only give me $25k for this boat.  The Bayliner cost more than the market value because the seller had installed new canvas and eisenglass, and some electronics.  This is something to be aware of.  Upgrades will not factor into your lenders decision.   I had that feeling again; the panic, dismay, why does the world hate me….blah blah blah.  But, since the boat was under 20 years old, I did not need the 30% down!  Yay!  I just had to pay the difference out of pocket, which I had since I was planning on having to front more for the 30% down.  Does that make sense?

On a boat over 20 years old, the lender required 30% down.

On a boat under 20 year old, I would just get the loan for what they deem it to be worth and make up the difference out of pocket.

Also, the liveaboard thing.  If you qualify the loan as a liveaboard purchase, they will not loan less than $30k I believe.  So I have a pleasure boat.

I’ll get into the next wave of paperwork next time.

Thanks for stopping by!

See you at sea!!

-Eileen

The importance of honesty…*or* Why the hell didn’t the seller mention that the starboard engine is broken???

Another episode of my ongoing journey to buy a boat.

Last week after my survey day was well underway and we had already begun the sea trial, the current boat owner decides to say “the carburetor on the starboard engine won’t go into secondary so it doesn’t go above 3000RPMs”.

Even I knew that the beat needs to run at full throttle on a sea trial.  The owner obviously knew about this before we left the dock.  It wasn’t noted in the listing, nor at the beginning of the survey.  Did he think we would’t notice?  Why on earth did he drive in from Arizona to the survey if he wanted to hide information?  This wasn’t a craigslist find…a style of purchase which I’m assuming may be less likely to go through all of the proper inspections.  He has the boat listed with a broker so he must know that a potential buyer will have a survey done.

Speaking of the survey, it came back today.  There is about $16,000 worth of repairs that need to be done.  Plus more non-immediate things to be repaired.  The $16k refers to the work that is necessary for the boat to be insured and be permitted in a marina.  And that doesn’t even include the engine repair which must be done before the boat can go out on a full sea trial.  I’m not even sure how that will work as far as cost and scheduling.

One main problem is that the bonding wires are disconnected, which has caused a bunch of parts of the boat to corrode.  Why they were disconnected is a mystery.  There’s no benefit to disconnection, according to the people I’ve asked.  Apparently these wires control the scientific issue of electricity  and water and metal.  I’m not quite bright enough to explain that, but I am bright enough to understand that they should remain connected.

I am in quite the pickle now.  Today I also had a meeting with the dockmaster who has rearranged other boats in order to fit the Si Yes Da for me.  I can move in whenever I like.  Too bad I may not have a boat.  My loan approval is only valid for 30 days.  Annnnnd the slip I secured is only so big, we planned for an 11’6″ beam (width of the boat), which is fine for most sailboats, but a power boat may be more.

Worst case, I lost the money I spent on the survey, lose my loan, lose the slip and have to start all over again with a lowered credit score.  Better case…I get a survey allowance for the repairs and the owner repairs the starboard engine…then I only have to look forward to about $7k in other repairs that need to be done.   Best case…I forget about this boat, get reimbursed by the seller for my survey since he concealed information which prevented a proper sea trial and I magically find another boat in the same range, get a survey done immediately and move into the slip.

The search continues….

 

The Cat 30…how I decided on a powerboat over a sailboat.

About a month ago I was still set on buying a sailboat as my liveaboard home.  It had been over a month, at least, since I put in an offer on a great boat and then learned the reality of getting a loan.  I was bummed, but had already taken steps to get more money saved.  I sold my Mustang and entered the world of riding a scooter for transportation…which is awesome by the way.  I found an add on craigslist for a 30 foot Catalina.  I forget the year, but it was newer for the budget I’m working with, probably late 1980’s.  I reached out to the owner, she gave me a detailed reply.  I contacted my broker, asking if he could come along.  I was hesitant to ask him because this boat was selling by owner, not through a boat brokerage.  So we worked out a fee for him that I would pay directly if the sale went through.  After a couple more emails to the boat owner, and a few hours spent scanning the posted images imagining this boat as my new home, we set a date to view the boat.

First thing; I had seen one of this boat owners boats before.  The very first sailboat I saw was one of hers.  I remember it being small and having a laundry list of “fixes” she had done.  I don’t know enough about the inner workings of  a boat to say whether they were good or bad ideas, of it that’s just the reality of boats as they age, but it was odd.  Upon realizing I would now see another one of her boats I was already disappointed.  We went down to see anyway.

The boat was what it was.  Small, decent shape and somewhat patched together as far as internal operations.  The v-berth is tiny, so if I sneezed in bed I’d knock myself out.  Limited galley, decent head, small salon.  I couldn’t live in this.  But since my financing was limited, I wondered if this is just what I’ll have to get.  The boat was on a slip at hotel marina, which means I’d get full use of their pools, hot tubs, gym, spa and discounts at their restaurants…kind of cool.

A lot of this process involves compromise and balance, and reality.  What can I afford?  How far is it located from work?  How small is too small?  What do I want out of this?  How often will I take the boat out?  With all of these questions bouncing around, and the ever looming idealistic delusions of grandeur, it’s important to ask questions and take time to analyze.  A lot of decisions I’ve made in life were impulsive or fast, done with little research.  Some were great decisions, some not so much.

Long story short, the boat was too small.  As we left, Brent (boyfriend) and Jason (broker) brought up power boats…for the millionth time.  I’d been dead set on a sailboat…the charm, the skill, the freedom from gas reliance.  But this was the last sailboat I’d see (except for that weird catfisher).  With a power boat I’d have a newer boat, more room and most likely an easier time getting around for my newbie, minimal boating needs.  I’m not traveling the world.  I can still take my sailing classes.  I can buy a sailboat down the road when I have more skill and can take a week or two or more off to travel.

That’s how the decision was made from sail to power.  A little part of me felt down, but I’m about 10 days away from owning my first boat, and the future is wide open(you have a Tom Petty song in your head now don’t you?).  I’ll be in a great marina closer to work, at another hotel (resort actually (; ), the dockmaster is wonderful, I’ll be in the smaller bay which has both my sail class school and Brent’s job…we can dinghy him to work, and maybe a cocktail or two.

That’s my story of sail to power.  Now all I need to do is figure out how to drive the thing ;).

Thanks for stopping by, hope you’re all having a great day!

Haul out/sea trial day, whew!

Wow.  I am exhausted!  All I did was sit on a boat and watch other people inspect it, but boy oh boy, was it hot out today.  90 degrees in November…are we in the tropics?

As this is an ongoing learning process for me, I’ll explain everything we did today.  Since I am buying my boat through a broker (Jason at Cabrillo Yacht Sales is awesome!), I am going as by the books as possible.  After my offer was accepted, the next step was to schedule a survey…what the hell is that??  This whole process is similar to buying a house.  I had no idea since I had been super close to buying a boat as is off craigslist. The survey is similar to a home inspection, you need professionals to go through your boat and make sure it’s working as it should, and that it is seaworthy.   Jason provided me a list of mechanics and surveyors that his company has worked with.  He can’t actually help me pick one out or say one is better than the other, just provide me with a list of contact information.  I could also find my own…but I’m new to this world so an suggestions help!

Since I am not purchasing a sailboat, I did not need to hire a rigger.  There are two parts (almost 3) to the survey day.  First is finding a mechanic.  He goes through the engines and generator.  Then the surveyor, he goes through every other part of the boat, making sure the lights work, the bilge pump works, the bathroom, the horn (mine isn’t working, dang!) and under the boat.  This is the sort of third part.  I had to schedule a time with a boatyard, and seeing as how I’m in San Diego there are a lot!  We went to the Shelter Island Boatyard.  They literally haul the boat out of the water, then the surveyor pokes around looking for blisters or imperfections and examines the props.  “Pokes around” most likely is not the technical term, but hey, I’m a newbie.  The sea trial part took place on our way to  and from the boat yard.  The boat is currently docked in San Diego Bay, which is the larger bay in San Diego.  I thought that we had to go out to the sea…I mean it’s a sea trial.  Basically they just need to run the boat at full throttle and see how everything handles.

The boat owner came out from Arizona to be present for the beginning of the day.  He’s already cleaned out most of his stuff.  It looks like new boat owners just “acquire” some of the previous owners items.

The mechanic today was Alfredo from Quality Marine.  He was great!  I would absolutely recommend him!  And the surveyor was Dean from Frank K Wyatt Surveyors; also awesome and would also recommend!

I”ll get their findings back in a couple of days.  From there I share it with my broker and we communicate with the seller to see if we have some wiggle room.  The starboard engine has a problem with the carborator(which I can’t spell).  There are a couple options to move forward: 1-we can ask if the overall price can be lowered to compensate for the issues, and 2-we can get a “survey allowance”, which would be the amount of money needed to repair the problems, but held in an escrow account that can only be used for the boat repairs.  For the second option the sale price would be the same but the difference needed would be in escrow.

We’ll see how it goes!

Here are some photos of the boat up in the air!

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Fast forward to an Express Cruiser…

Greetings from the worst blogger of all time.  Tomorrow is my survey and sea trial.  I’ll make a bunch of posts documenting whats been going on, but…I am very close to having a boat.

I’ve looked at a lot of sailboats.  I was set on owning a sailboat.  I’ve been enrolled in classes, bought a book about knots, watched all kinds of sailing videos on youtube, you name it.  The charm and opportunity of sailing free of reliance on purchased fuel and connection to the rest of the world felt like the right choice.  Unfortunately, I don’t live in a book or a movie.  I live within my income and debt.  So, I have to work with what I’ve got.  After seeing another disappointing tiny sailboat (if I sneezed in bed I’d have a concussion) my broker and boyfriend said for maybe the 100th time that I should check out a powerboat.

So fast forward to about 13 hours from now I will have a boat named “Si Yes Da” surveyed and hauled out.  She’s a 1991 31ft Sea Ray Sundancer.  Keeping my fingers crossed!

Recap of the process to follow.  Yes, I do a lot of things out of order.

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Ya take the good, ya take the bad, ya take ’em both and there you have…

…the facts of loans!!

The boat that I put in an offer on countered almost immediately…only $1000 less than their asking price, which was $42,000.  I offered $35,000…I know, kind of low, especially considering the quality of the boat.  It’s my first time, and my broker said why not…if they go for it, great!  If not, we’ll go back and forth.

Today I went to the bank, a local credit union in San Diego.  I like this bank a lot, but since it’s a credit union, they are rather conservative on unsecured personal loans, or luxury loans.  They do offer boat loans…for 2012 and newer…the boat I’m looking at is a 1989.  So I would have to apply for a personal loan.  I’ve been saving, but it’s not much, maybe 10% of the boat price.  I don’t make a lot of money, and I have a lot of student loan debt.  I’ve got one Bachelor’s and one associates degree, and I got them in the less popular backwards order.  This schooling is very costly, and has never helped me find a career which pays well enough to pay the loans off.  My loans actually go up every month even though I pay on time, and have for years.  It’s like I’m being punished for the rest of my life by enduring financial ruin as a result of trying to take the proper steps to avoid financial ruin for the rest of my life.  Quite the quandary.

This journey is at the “for real” part.  I’m so close to getting this boat, but right now it seems impossible.  The amount of money I’m asking for in a loan is peanuts compared to what people in this area need for a home.  Maybe this route won’t work out.  I also don’t want to have my broker working on finding me a boat if I can’t get a loan.  It’s a shame that my credit score is finally in good shape, only a few points away from excellent.  Anything with money is always a battle.   Renting just seems fruitless at this point in my life, and owning a home is out of the question.  A house in San Diego starts at about $400k…yikes.

One good thing though, I was just hired at an extremely high end restaurant in La Jolla.  Kind of ironic considering these people spend what I need for this boat in a weekend.  I can’t tell you how many Bentleys I saw today.  Hopefully this job will pay more, it’s a server position, so it’s always a little roll of the dice.  I’m excited.  I’ll need to brush up on my wine regions and varietals.

Tomorrow is another day.  Hope to see you all out on the water someday!