There are however certain criteria that need to be met before an individual can claim the full fair market value of a boat as a charitable deduction on his or her tax return.

An individual or a couple filing jointly are allowed to deduct up to 50% of their adjusted gross income as charitable contributions on their federal tax return. This would include the appraised value of a boat. Most states also recognize the charitable contribution of boats but State rules can vary and a tax professional should be consulted with regard to an individual's specific state.

The receiving charity needs to be a 501 (c)(3) organization designated by the IRS. Eligible 501(c)(3) organizations are listed on the IRS website.

When a vessel is donated to a charity several conditions must be met in order for the donor to deduct the appraised fair market value of the vessel.

An acknowledgement by the receiving charity that it will make significant intervening use of the yacht stating in detail on IRS form 1098-C what that use will be and that title will be held by the charity for a minimum of three years. Intervening use has not been rigidly defined but it is generally accepted that if the donation assists in the mission of the charity then it will qualify. A copy of form 1098-C is required to be sent to the donor and the IRS.

If the receiving charity makes material improvements on the vessel as an alternative to “intervening use” then the donor can take the full fair value of the yacht as a deduction. This assumes that the yacht with material improvements increases in value.

If the charity acknowledges that it is accepting the vessel for use by a needy individual or to another 501(c)(3) organization then this will also qualify a donor for a charitable deduction of the full appraised value.

A donated boat with a value over $5,000 must be appraised within 60 days of the actual donation. This is usually done by a certified marine appraiser or someone in a position to know firsthand the fair market value of the boat. Cost of an appraisal can vary with the type of boat, its location and size, but generally it will run between $15.00 to $25.00 p/ft.

Donation papers are usually formalized with an IRS form 8283 and a Deed of Gift. The 8283 document is signed both by the receiving charity and by the appraiser affirming its appraised value. If at any time prior to the three year holding period a boat is sold then that must be reported on IRS form 8282. A copy of this must also be sent to the donor.

If an individual does not seek a charitable deduction for the full appraised value of the donated boat then the charity is free to sell the boat for whatever it will bring on the market. Since market conditions vary with weather, time of year and geographical location of the boat this limits an individual donor’s deduction to the sale price realized by the charity.

Once a 501(c)(3) organizations receives a Deed of Gift for a specific vessel complete responsibility transfers in its entirety to the receiving charity. All ongoing costs such as yard bills, maintenance, insurance and transport become the responsibility of the charity.

If you have additional questions or we can assist you in working through a boat donation please call or e-mail us. We are a 501(c)(3) organization that supports these charities through boat donations.

For more information and to receive a free evaluation of your boat for donation purposes, please contact us for a free appraisal.