How Does A Boat Donation Tax Deduction Work?

One of the many reasons why people decide to donate a boat to charity is because they can deduct the value of their donation from their taxable income so that their tax due is reduced. A boat donation tax deduction can be quite substantial due to the fact that boats are quite high value items. That being said, it is important that you understand how the process works first.

Can You Claim a Boat Donation Tax Deduction?

The first thing you have to look into is whether it is possible for you to claim such a deduction. This will only be possible if you have chosen a charity that is 501(c)3 registered. Good charities like this one, have this kind of registration. The best place to check on whether or not they have such a registration and whether it is current is through the IRS itself.

How to Make a Boat Donation Tax Deduction

The rules on claiming a tax deduction for a boat donation are quite simple:

1. If your boat sells for less than $500, you can deduct the fair market value of your boat up to $500.
2. If your boat sells for $500 up to $3,000, you can deduct the sale price of your boat.
3. If your boat sells for more than $3,000, you can deduct the sale price of your boat but you also have to provide proof of an independent valuation.

It is quite common for boats to sell for more than $3,000, which is why you may want to look into getting that independent valuation beforehand. However, good charities will inform you about this and even guide you to a particular professional if necessary.

Of tremendous importance is that the charity provides you with a tax receipt that shows the value for which your boat was sold. Do remember that this value does not have to be equal to the fair market value. This means you can be lucky and deduct more than your boat was worth, or unlucky and end up deducting less than what your boat was worth. Nevertheless, what is important is that you are doing something good for the community.