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It takes some work to figure out the fair market value of boat donations. Here are some tips to guide you:
- If the vessel is worth more than $5,000, a certified appraisal will be required.
- IRS Publication 526 offers some advice and it is also is a good idea to check area market guides where boats are offered for sale. These publications may include the BUC, a used boat guide that shows high and low values, depending on condition and equipment.
- The IRS also advises people seeking to donate a boat to consult a marine surveyor, whose job is determining the fair market value of vessels and marine equipment.
The Boy Scouts of America, the Maine Maritime Academy and the Northwest School of Wooden Boatbuilding are all nonprofits actively seek boat donations to enhance their work in education and research.
While most charities sell boat donations for the proceeds, these organizations also have ocean-based programs that require a fleet of seaworthy vessels.
This is good news for people who want to donate a boat and claim the fair market value as their tax deduction. Here is a brief synopsis of the organizations:
- The Northwest School of Wooden Boatbuilding, for example, has a mission to preserve the tradition of wooden boatbuilding in the United States.
- The Boy Scouts of America offers Sea Scouts, which highlights comunity service and nautical education for teenage boys.
- Maine Martime Academy is a college that offers nautical training and emphasizes America's shipbuilding and seafaring traditions.
These organizations have specific critieria for the boats they need in their work. So don't expect them to automatically accept boat donations. But they will consider your offer of a charitable gift.
If you happen to donate a boat directly to a charity that will use the boat or improve it prior to re-selling it, there are several resources that can help you determine its fair market value. The following sites will help you determine the value of your boat. NADA Guides lists pricing for powerboats and sailboats from 1970 – 2003; BoatUS.com will email a free estimate of the fair market value of your used boat, and Boat Trader Online lets you check the value of your boat compared to current boats for sale.
Donating a motor boat, sail boat, fishing boat, yacht or other water vessel to charity is another form of vehicle donation. Many organizations accepting cars also accept boat donations, and many nation-wide services will process your donation for you.
If you donate a boat to charity and claim a deduction greater than $500, you need to follow new tax rules. Here are some basic guidelines to follow:
- Most likely, the boat donations will be sold by the charity for the proceeds. Often the boats are sold by large auction houses for less than fair market value.
- The amount the charity gets is how much you claim as your tax deduction.
- The charity must send you an acknowledgement of the sale and the price it got for the boat donation. You will need to attach this acknowledgement to your tax forms when claiming a tax deduction.
New tax laws require people who donate a boat to value their tax deduction at the amount the charity gets selling the vessel.
In most cases, charities sell donated vehicles -- boats, cars, trucks and campers and the proceeds go to the charity's causes. But the new tax law can be challenging for boat owners, who may get substanially less than the market value of their boat when they donate it to charity.
However, there is an exception to the 2005 IRS rule: If the charity keeps the boat donations for "significant intervening use" in the organization's work, the donor can claim the fair market value of the vessel at tax time.
These charities are likely to be marine-based groups that do research and education on the water.
Donors with expensive boats may want to consider seeking out charities that will use the vessels in their work.
The IRS requires that you have a certified appraisal when you donate a boat worth more than $5,000. It is the donor's responsibility, not the charity's, to cover the cost.
To get an appraisal, donors will need to contact a marine surveyor, who will assess the boat's value with an on-board inspection.
The marine surveyor will estimate the fair market value and provide a written report after an on-board inspection of the boat, its equipment and systems.
If you need help finding a marine surveyor, you may want to contact the Society of Accredited Marine Surveyors, an industry group that offers a worldwide listing of members who can conduct apprasials for boat donations.
When making boat donations, the donors may need to come up with the vessels' fair market value, in order to get a tax deduction.
What is fair market value?
It is the price between a willing seller and willing buyer, with full disclosure of the boat's condition.
Fair market value is not a guess but a calculation.
For help, check pricing guides in your area. Find out what comparable boats in similar condition recently sold for. Then document your research, in case the IRS has questions later.
As of January 2005, IRS rules for vehicle donations, including boat donations, state that you may deduct the full price a charity receives for the sale of your boat. This process is much simpler than the previous fair market value system, and will reduce the risk of your overvaluing the boat. The charity to which you are donating should provide you with an initial receipt for the donation when the boat is picked up, and is required to send you a second receipt as soon as the charity sells the boat. That sales price amount is your tax deduction. Note that if the charity is keeping the boat for its own use or to make material improvements prior to re-selling it, you may still be able to use a fair market valuation.
Believe it or not, charities accept boat donations to support their causes. Some even accept yachts. Most charities do not launch the boats, but sell them and use proceeds from the boat donations to help support their causes.
Boat donations and other types of vehicle donations make sense for charities.
Many work with auction houses to sell the vehicles, and make the process easy and convenient for the donors. In return, boat donors get a tax deduction and dispose of unwanted watercraft without the hassle of putting them up for sale and fielding phone calls.
Major charities in your area likely have vehicle donations programs. Just pick up the phone to find out if these organizations accept boats as well.
Most often the charities have dropoff locations for the boat donations, or they will send a driver to pick up your boat. Some even provide the trailer.
The gross proceeds that the charity collects when the boat is sold is the amount of your tax deduction.
When you donate a boat to charity, you will need to provide the organization with a Deed of Gift, which includes a description of the vessel.
If you need help preparing the Deed of Gift, ask the charity. The charity must provide donors with a receipt acknowledging the charitable contribution.
Hold on to this receipt because you will need it at tax time. If the vessel is registered and you hold a title, you also will need to transfer the title to the charity.