MONEY MATTERS CONSIDERATIONS FOR BOAT SELLERS BY MICHAEL VATALARO
bOat DONatiON behiND the sceNes
Donating your boat to charity certainly is a generous thing to do, but it could be financially
smart, too, if you haven’t been able to sell it in this market. Here’s how it works
Let’s say that yOu’re like i am, an owner of a good-sized older boat that runs well, but the interior is dated. in my case it’s a 32- foot flybridge sedan from 1979. Fully refurbished and in the right local market, according to comparables, it might go for as much as $18,000. but in its present condition and location, the best offer i’ve
received in more than a year on the market is $10,500. after my broker’s commission (and a few items to address after a survey and sea trial), i’ll be lucky to
walk away with around $8,000.
With a new addition to our family, my wife and I would like to buy a different boat to
put in the marina slip that’s already costing us $4,000 a year, so at this point, we’re weighing
the pros and cons of donation. Surprisingly, it turns out that such an option might work well
for us. If we donate our boat to a national charity that uses a “smart” facilitator, meaning one
that will spend the time and money to update the interior, and perhaps even move it to a
better local market for our make and model, it could fetch the full market value of $18,000.
As a donation, that grants us an $18,000 tax deduction, which, depending on our tax rate
for the year, could result in as much as $6,000 off our tax bill. The actual cost to us would be
about half our annual slip fee, and the charity we choose might receive as much as $7,500.
We wouldn’t need to lift a finger, other than to make a call.
Fred Kettinger from Norristown, PA, took this beautiful sunset shot on the Sassafrass River, in Maryland for our photo contest last October.
On the other hand, if we donate the
boat to a local charity that doesn’t use a
facilitator experienced with boats, one who
ships it to auction to sell quickly, the final
selling price most likely will be much lower,
likely less than our best offer. The charity,
after paying the auction commission, would
end up with less money, and our write-off
would be perhaps only worth $2,000 or so.
Before considering donation, ask yourself some simple questions.
1Do I itemize my deductions on my tax return? Only about a third of Americans
itemize deductions, the rest take the standard deduction. Donating a vehicle will only
benefit you as a tax write-off if you itemize.
2Do I have enough income to offset? The IRS only allows you to claim charitable deductions totaling 50 percent of your
Adjusted Gross Income (AGI) in a given year.
So, if you donate a boat worth, say, $30,000
as in the example below, to receive the full
benefit of the donation, you’d need to have
earned enough that year to have an AGI of
at least $60,000. If you usually make additional charitable donations, they also count
against that 50-percent limit.
While donating a boat to charity often
amounts to a major gift for the receiving
organization, it doesn’t have to be a major
undertaking for you, the boat’s owner. Many
nonprofit organizations use a specialized
facilitator to handle the transactions, making
the process efficient for the donor, and easy
for the charity of your choice. Of these specialized firms, only a few can handle larger,
non-trailerable boats, which typically require
more effort and knowledge to sell on behalf
of the charity. For this article, we’ll focus on
one of those, Action Donation Services, with
which the nonprofit BoatU.S. Foundation
for Clean Water and Boating Safety has
chosen to work for boats being donated to
00 | BoatU.S. Magazine OctOber | NOvember 2011 WHERE TO GIVE? THERE ARE MORE THAN 1. 6 MILLION REGISTERED CHARITABLE ORGANIZATIONS IN THE U.S. LISTED IN IRS PUBLICATION 78, SO MANY THAT THEY HAVE THEIR OWN DEDICATED SEARCH ENGINE ON IRS.GOV.