Boat owners who decide to donate their boats often wait until the end of the year or boating season. Besides doing good, donating a boat to a charity has potential tax benefits. But according to the BoatU.S. Foundation, waiting until the end of the year could shortchange a boater’s potential tax benefits.
How can waiting to donate a boat until the end of the year potentially hurt you?
According to the nonprofit BoatU.S. Foundation and Boating Safety and Clean Water, which operates a boat donation program, most charities will sell your donated boat so they can receive the proceeds to fund operations and programs while you receive a federal tax benefit.
However, the Internal Revenue Service bases the value of the charitable deduction on the actual selling price of the donated boat. This means both your and the charity’s interests are aligned—the higher the price received on the sale of the boat, the more you stand to gain in tax benefits in the form of tax deduction.
“Notwithstanding the pandemic, more boats are sold now than at any time of the year,” said BoatU.S. Foundation for Boating Safety and Clean Water President Chris Edmonston, “With demand at the greatest, boaters are likely to have the best opportunity for maximum donation value.”
Another reason why waiting until the end of the year may not be the best time to donate your boat is that the vessel may not sell until the following year, delaying potential tax benefits.
Unlike many charities that accept boats, the BoatU.S. Foundation also actively uses many donated boats for training purposes, such as teaching new boaters how to operate a boat. In some cases, donated vessels—typically single engine center consoles—are needed for Foundation on-water training programs. With these boats, the donor may use the surveyed value at the time of donation for tax purposes, and the write-off may be taken immediately.
If you are considering donating a gently-used boat contact your favorite charity to see if they accept donated boats, or if you want to donate it to the BoatU.S. Foundation, go to BoatUS.org/Donate/Boat-Donation where you will find the IRS brochure “A Donor’s Guide to Vehicle Donation,” IRS Publication 526 “Charitable Donations” and IRS rules for determining maximum deductions for charitable contributions.
The BoatU.S. Foundation urges potential donors to always consult a tax professional regarding boat donations.