Donating Your Boat – A Win-Win Situation

While we prefer spending time on the water enjoying our boats, often life’s circumstances get in the way. If you have a boat that’s been sitting unused in your yard for longer than you care to remember, it may be time to think about how to get the boat into the hands of another owner to enjoy.  The market for reasonably priced used boats is fairly strong across the country, but maybe you’ve tried to sell that powerboat or sailboat with no luck. Or perhaps your boat needs work done on it before you can expect to find a buyer and you don’t have the time or money to invest in repairs.

In some cases, donating your boat to a non-profit organization may offer a good solution. As the end of the year approaches and thoughts turn to tax planning, it’s a good time to explore this option and see if it makes sense for you. BoatU.S. recently published an extensive article about boat donations in their BoatU.S. Magazine, here’s a link.  Remember that neither they nor us are offering tax advice for your situation.

There are a couple of key points to consider before you pursue the boat donation route:

  • Generally, you need to have enough income to offset with your donation. Donating your boat is not like selling it outright. Instead of getting paid for your boat, you will be able to deduct the final sale amount of your boat from your taxable income. This works great if you have a sizable income, but it’s not as effective if you don’t have enough income to offset the amount of the boat’s sale price.
  • You will only be able to use the sale price of your donated boat to lower your taxes if you itemize your deductions. If you just take the standard deduction, you will not be able to reduce your taxable income by the amount of the boat’s sale price.

If you meet these criteria, then it makes sense to for you and your advisor to dig further into the mechanics of donating your boat. You’ll need to determine if you hand your beloved vessel over to an organization that plans to sell it or to one that will use it to support its core mission (such as the Sea Scouts). If your boat it sold, you can only write off the actual sale price (not the amount it may be worth on the market). That also means that the write-off has to be used for the year in which the boat was sold, not the year in which you donated it (if they happen to be different).

If 2011 was a good year for you financially and you’re starting to feel sorry for that fishing machine on the trailer by your garage, hurry up and donate it to your favorite charity! There may still be time for them to get it sold before the end of the tax year which will help raise some cash. And that’s a win-win situation!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s