Boats donated to a charity can qualify for a significant tax deduction.
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.
When a vessel is donated to a 501(c)(3) non-profit organization, 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 vessel 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.
- 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 vessel as a deduction. This assumes that the vessel with material improvements increases in value.
- If the charity acknowledges that it is accepting the vessel for use by a needy individual or by 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 surveyor/appraiser. 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 per foot of boat length.
- Donation papers are usually formalized with a Deed of Gift, IRS forms 1098-C and 8283. 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.
Once a 501(c)(3) organization 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 many charities through boat donations.