Any sailboat, motorboat or yacht left sitting in the harbor unused can quickly become a hole into which vast amounts of money are poured. But donating a boat to a legitimate charity can provide a win-win situation for both the owner and the charity. There are some simple guidelines to follow, however, so that the charity truly benefits and that the individual donating the boat can make a legitimate charitable deduction on income taxes.
Make sure that the recipient of your boat donation is a legitimate charity and not just some organization looking for resell your donation for a profit. Check with the Charity Navigator website or the Better Business Bureau, or deal with a local charity that you have had experience with in the past. Be wary of companies or organizations claiming they can help you donate your boat, because these are often merely middlemen who will take a huge portion of the boat's value and pass only a mere 10 percent of the proceeds to the real charity. Only organizations that are IRS-approved 501 (c) (3) organizations can qualify you to take a tax deduction on your boat donation.
In order to take a legitimate tax deduction, you cannot simply guess at the boat is worth. Check NADA Guides to get an accurate assessment of your boat's value. If the charity plans on selling your boat for the proceeds, be sure to get a receipt indicating the monetary gain so you have that for your IRS records. If the boat will be kept by the charity for use in their work, or the value of the boat is less than $500, a receipt is not needed for tax claim purposes.
It's an excellent idea to keep track of any paperwork regarding boat ownership and transfer of said ownership so that the boat's former owner no longer has any liability once it's transferred to the charity. It's also preferable to deliver the boat to the charity organization yourself to make sure that it has been received and there are no disputes later.