The Donation Option

With the donation this week of Jim Swartz's STP-65 Moneypenny (at left - stop drooling) to a maritime college here on LIS, yacht donations are suddenly getting a lot of press. When you give away a multi-million dollar boat just 6 months after it is launched, you're going to get some attention.


I handled a J/35 donation for a client two summers ago that was a real win-win, and it is an option I always discuss with my clients that have hard-to-sell boats. To be clear, donation is a last resort, but if we've exploited all of our other options, it is one that can work out well.

For an owner, the tax write-off is the central issue, and this is where you need to be careful (and have a broker representing your interests). Many organizations that solicit boat donations will immediately turn around and sell that boat for a fraction of it's value, usually on sites like eBay. In this scenario, the donor can only legally write-off the selling price of the vessel. Not a positive outcome.

The far better scenario for the donor is to donate the boat to an organization that will use it for a minimum of three years (it's called "significant intervening use" in the tax code). This allows you to deduct the full appraised value of the yacht as determined by an accredited surveyor - a figure which is usually much higher than what you could actually sell the boat for on the real market (think asking price vs. selling price).

Most often the organization is a maritime school that relies on a sailing program to teach skills like seamanship, teamwork and leadership. If you've done major regattas then you've probably raced against donated boats run by midshipmen. As a donor, you get the enjoyment of seeing your old boat out there on the racecourse with a full crew of enthusiastic kids.

So should you still be working with a broker? Absolutely. Good brokers have long-standing relationships with the maritime colleges, and more importantly we can manage the whole process and make sure you have all of the necessary documentation from the school to satisfy the IRS. The school will typically pay a small commission to the brokerage, but that has no effect on your write-off.

Finally, if you are trying to sell your old boat so that you can upgrade, the donation option is especially appealing right now, in that it allows you to take advantage of an extremely strong buyer's market.

If you want to talk specifics or you think this might be right for you, feel free to get in touch.