Most Americans, and particularly high net worth individuals, are anxiously awaiting the outcome of the proposed tax reform plans currently moving through the House and Senate. Among the provisions in the bills, there may be significant reduction in deductions that can be taken for the purchases of personal property, other than real estate, such as a luxury motor yacht. However, one “tax break” that the GOP plan is committed to protecting, is the deduction for charitable giving.
As the end of the year draws near, yacht owners, who tend to be high-net worth individuals, are often looking for ways to maximize their tax deductions and minimize their tax obligations for the next year.
One way for high-earners to do this is to maximize charitable giving before the end of the year. While many will do this by contributing in various ways to their given philanthropic pursuits, one way that you may not have considered, is by donating your boat!
The Value of Giving
Most yacht owners realize the value of giving back. The rewards of charitable giving stretch well beyond a tax planning strategy. Giving to charities of your choice is a way to support your personal values and beliefs, to ensure your legacy, and to give back to the communities that have helped to foster your success.
As successful people, yacht owners also realize that they can often do more for a charity then merely writing a big check, and can maximize the impact of their gifts with “non-cash” donations such as stocks and securities.
But what they may not realize, is that here in Florida in particular, we have the option of boat donation. If you have been thinking about selling your yacht, tender, or other vessel, why not consider donating her to your favorite charity instead? As long as you donate to a 501-C-3 non-profit, and they use it for charitable purposes, you can receive the full fair market value of the vessel as a tax deduction, and in most circumstances, the charity will even arrange for the pick-up and delivery of the boat.
Tips for Donating a Yacht or Other Boat
Donating a yacht or boat to a charity can be one of those rare “win-win” situations. You can get a huge tax write-off, and give the charity the benefit of a very generous donation. However, before you donate such a valuable asset, there are a few tips you should know.
- Cut Out the Middleman – There are many “third party” intermediaries that often advertise quite heavily in our area, especially around the Holidays, to accept donations of cars and boats for charity. If at all possible, it is always best to deal directly with the charity you wish to help. While these intermediaries can make the process easier, they make their living by taking a percentage of the value of the donation, sometime as much as 90%. If you must use such an agency, at least get upfront, how much is their take.
- Find the Right Charity – Not all charities are equipped to accept a donation as large as a boat or yacht. If it is impractical for the charities you usually like to support to accept such a gift, look around for a reputable charity that is. You can research charities’ track records online through the website of the Better Business Bureau or through Charity Navigator.
- Delivery of the Vessel – If the charity is not in a position to take delivery of the vessel themselves, it is best if you deliver it to them yourself. If the charity has to incur the expense of taking delivery of the boat, it may negate a large part of the value of donating it to them.
- Keep Detailed Paper Work – If your donation is worth more than $5,000, your documentation must include an outside appraisal. You’ll also need proof of the donation, such as a receipt from the charity and a copy of the title change. This may be one of the biggest charitable donations you ever make. By keeping accurate and thorough paperwork you can make sure that the charity gets the most benefit and you get the biggest possible deduction.
There is no question that the charitable giving of high-net worth individuals does genuine good for our South Florida community. Donating a high-value item such as a motor yacht can provide hundreds of thousands of dollars in support of the good works of charitable organizations right here in Florida.
If you are looking for a truly unique way to give back this holiday season, a donation of a yacht could support a deserving charity for years to come.
At 26 North Yachts, we are not accountants or financial advisors. This article should be taken as general information. The complexities of donating a motor yacht to charity should not be undertaken without the advice of your financial professionals. However, if you would like to benefit from our experience in this area, or if you have any questions or comments about this blog post, do not hesitate to contact our Sales Specialists, or call us at (855) 318-6328.