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The Advantages of Boat Donation
Thank you for considering donation of your boat! Your generous gift will help us change the lives of disabled children, adults, and veterans.
A charitable tax deduction is a distinct advantage for boat owners attempting to sell their boats for several reasons.
- Boats on the market for more than 45 days begin to lose value.
- The expenses of storage, transportation, maintenance, insurance, brokerage fees and possible expensive repairs continue when a boat is listed for sale. Upon donation (receipt of a Deed of Gift), Inclusive Adventures immediately assumes all costs.
- In some cases, the return on a charitable contribution of a boat to our program can be close to the actual selling price, particularly in a weak market.
- Inclusive Adventures takes complete legal responsibility for the boat upon donation. We process all IRS documents for the donor.
- Yacht or Boat Donation can be a very effective wealth preservation strategy - ask us or your estate planner how.
Importance of a Recent Appraisal
If you donate a car, a boat, or an aircraft to a charitable organization with a claimed value over $500, your deduction is generally limited to the gross proceeds from its sale by the qualified organization. Often, based on market demands this can be significantly less than its appraised "Fair Market Value" (FMV) and would be unknown at the time of donation. In 3 specific cases, one of which
When a vessel is donated to a 501(c)3 non-profit organization such as ours, per IRS Publication 526 one of the following three conditions must be met in order for the donor to deduct the appraised Fair Market Value (FMV) of the vessel. By the nature of our programs, Inclusive Adventures can almost always utilize your vessel in one of these three ways so you can make a fully informed, confident decision before donation and deduct the vessel's full Fair Market Value (FMV).
- An acknowledgement by the receiving charity that it will make significant intervening use of the vessel stating in detail on IRS form 1098C 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 that increase its value as an alternative to “intervening use,” then the donor can take the full fair market value of the vessel at the time of donation as a deduction.
- 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.
- An “arm’s length” appraisal by a third-party marine surveyor of a donated boat’s value is very important to the FMV donation process. Once that is completed, the donor (either as an individual or couple filing jointly) is allowed to deduct up to 50% of their adjusted gross income as a charitable deduction on their federal tax return in the year in which the boat is donated. If the entire appraised value (FMV) cannot be used in year one, IRS rules allow the balance to be carried forward for five years. Most states also recognize the charitable contribution of boats, but state to state rules can vary. Consult a tax professional regarding your state.
- A donated boat with a value over $5,000 must be appraised by a certified marine surveyor within 60 days of the actual donation. Cost of an appraisal can vary with the type of boat, its location, and size, but generally it will run between $15.00 to $20.00 per foot of boat length. Many donors prefer to obtain the appraisal before donation, which is recommended to avoid surprises. However, if agreed without any assurance of appraised value, Inclusive Adventures will obtain the appraisal for the donor.
- Donation papers are usually formalized with a Deed of Gift, IRS forms 1098C 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.
According to the IRS
IRS donation form 1098C is required for you to receive a full fair market value tax deduction from the IRS for your boat donation. This form tells about the charitable organization you gave to, what they have done with your boat, and if they have sold it, what price they received. We will provide you this form. If you have an appraisal, attach it to form 1098C and form 8283.
When you donate a vehicle, watercraft, boat trailer, or anything else with a title to charity, you should receive a IRS form 1098C from that charity within 30 days of the date of donation or 30 days from the date of sale of your donation by the charity (depending on what the charity has done with your item).
A donee organization must file a separate form 1098-C, with the IRS for each contribution of a qualified vehicle that has a claimed value of more than $500. A qualified vehicle is any motor vehicle manufactured primarily for use on public streets, roads, and highways; a boat; or an airplane.
You Must File Form 8283 if the amount of your deduction for all non-cash gifts is more than $500.
If your watercraft donation is worth $5000 or more, your appraiser must fill out all appropriate sections. Form 8283 can lock in extended tax deduction value and savings eligibility over the $5000 threshold.
Certain commercial firms and trade organizations publish monthly or seasonal guides for different regions of the country, containing complete dealer sale prices or dealer average prices for recent model years. Prices are reported for each make, model, and year. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. The prices are not "official," and these publications are not considered an appraisal of any specific donated property. But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. You can also find pricing information about used cars on the Internet.
An acceptable measure of the FMV of a donated car, boat, or airplane is an amount not in excess of the price listed in a used vehicle pricing guide for a private party sale, not the dealer retail value, of a similar vehicle. However, the FMV may be less than that amount if the vehicle has engine trouble, body damage, high mileage, or any type of excessive wear. The FMV of a donated vehicle is the same as the price listed in a used vehicle pricing guide for a private party sale only if the guide lists a sales price for a vehicle that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated vehicle.
You donate a used car in poor condition to a local high school for use by students studying car repair. A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. However, the guide shows the price for a private party sale of the car is only $750. The FMV of the car is considered to be no more than $750.