Donating a yacht to a qualified charity can create some very advantageous situations for both sellers and buyers.  Have you ever considered this?  Done properly, a seller can immediately (1) realize a significant tax benefit, (2) help a worthy charity, (3) dispose of the yacht, (4) stop outlays for insurance, mooring, et cetera, and (4) receive some cash back.

For instance, let’s say that you could get an appraisal for your vessel at $1.5 million, and you were in the 39.1% tax bracket.  Lighthouse Yachts^® could help you contract with a charity that is a “qualified organization.”  We will provide you with the contacts to charities known to us to be open to receiving vessels and believed by us to be qualified organizations.  Perhaps you have a favorite charity as well and we will work with you to see if they are interested and if they are qualified.

The qualified charity might also be able to give you a combination of cash and tax deductions.  On a vessel appraised at $1.5 million, you might receive $700,000 in cash and a receipt for an $800,000 donation.  That donation at your tax bracket might be worth $312,800.  As always, since we would be the brokers of record, we will be there every step of the way to make sure the transaction closes properly.  And of course, because you were smart enough to choose Lighthouse Yachts as your broker, you put even more money in your pocket compared to a traditional broker who charges a 10% brokerage commission.  In many instances, in fact, the charity pays for some or all of the commission.

In addition to the tax advantages, and the knowledge that you are benefiting a charity, there is also the ability to sell your boat almost immediately.  This situation puts an early end to the expenses of maintaining your vessel:  insurance, mooring, debt service, crew, maintenance, et cetera.  Sometimes, in some markets, this savings alone makes a donation deal a great decision for the seller.

Finally, remember that not all donation companies are for you.  Some companies – particularly the ones with deals that seem too good to be true – are only going to create trouble for you in the long run.  You need a lighthouse to show you the way.

2005 UPDATE!  If you donate a yacht to a qualified organization after December 31, 2004, your deduction is going to be limited to the gross proceeds from its sale by the organization.  For instance, if you donate a yacht you think is worth a million dollars, but the charity sells it for $700,000, your deduction will be tied to the $700,000 figure.  There are some exceptions, but by and large, it looks like the days of deducting the yacht's fair market value are gone.  This just makes it all the more important to work with the professionals at Lighthouse Yachts.  Here are two links from the IRS you may find useful if you would like to familiarize yourself with the new law.

http://www.irs.gov/newsroom/article/0,,id=131660,00.html

http://www.irs.gov/publications/p553/ch01.html#d0e1112

Note:  Do remember that we are not certified public accountants nor attorneys and we are not giving legal, financial, or tax advice.  You should always consult your own attorneys, accounts, and tax advisors before entering into any donation arrangement.  We are more than happy to work with your advisors.  Similarly, we cannot and do not express any opinion or representation concerning the suitability of a particular charity for your particular purposes or its tax exempt status.  You should under all circumstances request a written letter from the proposed charity confirming their tax-exempt status and obtain the approval of your own tax advisor as well.