The Advantages of Boat Donation
Thank you for considering donating your boat! Your generous gift will help provide children and adults with marine educational opportunities, such as boat building, sail training, marine sciences, fisheries science and environmental studies.
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, maintenance, insurance, brokerage fees and possible expensive repairs continue when a boat is listed for sale. Upon donation, all costs to the donor cease and immediately become the responsibility of Block Island Maritime Funding (BIMF).
- In some cases, the return on a charitable contribution of a boat can be close to the actual selling price, particularly in a weak market.
- Boat donors have the option of selecting from a number of our client charities to which they can allocate the proceeds of their boat donation.
Importance of a Recent Appraisal
An “arm’s length” appraisal of a donated boat’s value is very important to the donation process. Once that is completed by a third-party marine surveyor, the donor (either as an individual or couple filing jointly) can take the appraised value as a charitable deduction in the year in which it is donated.
- Upon donation, BIMF takes complete legal responsibility for the boat, including the processing of all documents for the donor, the IRS, accountants, and lawyers. BIMF also assumes all ongoing costs including storage, transportation, maintenance, insurance, repairs, and broker’s fees.
- An individual donor or a 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. This would include the appraised value of a boat. If the entire appraised amount cannot be used in year one, then under IRS rules the balance can be carried forward for five years. Most states also recognize the charitable contribution of boats, but state to state rules can vary and a tax professional should be consulted with regard to an individual’s specific state guidelines.
- When a vessel is donated to a 501C3 non-profit organization such as ours, 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 market 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 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.
- 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.