Donate a confirmed exchange to charity ?

[luv_maui]

Starwood desk this morning told me that I can donate my confirmed exchanged week to a charity, I'd just have to add that guest certificate. I'm wondering if that is correct or if they were simply incorrect. Obviously I wouldn't want the hmguest to get turned away upon check in. Just trying to know what's correct

 

[PamMo]

Yes, you can donate a vacation week to a charity. We've donated weeks to local charities AFTER having a discussion over how it could help them - usually for an fund raising event with a raffle or auction. Once the bidder/winner is announced, we simply put the reservation in their name.

Note that the donation is NOT tax deductible.

 

[DeniseM]

To transfer it, the name has to be changed to the final guest who will use the confirmation.

Let's say you donate it to the school and Mr. and Mrs. Smith win it in a raffle. You will have to get all of their contact info. and call Starwood, and put the confirmation in the name of Mr. or Mrs. Smith:

Name as listed on ID
Address as listed on ID
phone number
number of adults
number of children

 

[lizap]

Pam, just curious why the fair market value of the donation is not tax deductible? Has there been an IRS ruling on this?

Yes, you can donate a vacation week to a charity. We've donated weeks to local charities AFTER having a discussion over how it could help them - usually for an fund raising event with a raffle or auction. Once the bidder/winner is announced, we simply put the reservation in their name.

Note that the donation is NOT tax deductible.

 

[DeniseM]

Pam, just curious why the fair market value of the donation is not tax deductible? Has there been an IRS ruling on this?

Yes - Look at the tax article on the TUG Advice page.

 

[lizap]

Ok I read the short (very) section on this, but it seems counterintuitive. I certainly can understand not being able to take a loss on the sale, as it's not an asset, but as a gift to charity? The reason given in the ADVICE section is its not deductible because it's a Right to use, but if you don't take the deduction until the person/org whom you've given it to has taken the trip, it's no longer a RTU. When I run out of things to do, I may contact the IRS on this one.

Yes - Look at the tax article on the TUG Advice page.

 

[DeniseM]

The author is a tax expert, so I believe the info. is correct.

 

[lizap]

Ok, I read the IRS rules (Pub. 17). Still don't get why it wouldn't be deductible in the scenario I described.

The author is a tax expert, so I believe the info. is correct.

 

[DeniseM]

The author is former TUG Admin. Dave M - he worked for a Fortune 500 Company. If you search the old threads, you can find posts in which he discusses this specific topic.

*You can contact him for more info. by sending a PM to Dave M.

 

[luv_maui]

Does the answer change if it's an RCI or II exchanged week, respectively?

 

[DavidnRobin]

Ok, I read the IRS rules (Pub. 17). Still don't get why it wouldn't be deductible in the scenario I described.

I agree with you (regardless of expert opinion) - I personally would include it and err on the side that benefits you - not them.

Besides... the IRS budget has been decimated in recent years (gee... I wonder who that benefits?)? As long as your charitable contributions are aligned with your AGI - the risk of an audit due to including this is extremely low. And, questionable (IMO) as to why the donation of a week (not VOI itself) that has actual substantiated value would not be tax deductible.

IMO - not a tax expert, but at least a logical thinker.
also - no tax accountant or tax professional is going to tell you to take it when it is against tax code - especially when they are responsible for the tax filing.

 

[PamMo]

Liz, I'm not sure why it's not tax deductible either (there's a lot about the tax code that I don't understand), but our accountant confirmed that it is not - even though we could clearly show that the donation raised X amount. I imagine some owners would try to give worthless weeks to charities, and then write off the MF's or some inflated value of the week as a donation.

If it fits in with their goals, it's still fun to donate a great week to your favorite charity, because it can generate some excitement and pizzazz to an event - and you get to feel good about helping out. BUT, it doesn't always raise as much money as if you rented it yourself and gave the proceeds to the charity. (Of course, then you would get the tax deduction for the cash donation.)

Add: There's been discussion on TUG, with conflicting reports that RCI and II will/will not let you donate an exchange week to charity. If anyone knows what the current answer is, please let us know!

 

[okwiater]

I agree with you (regardless of expert opinion) - I personally would include it and err on the side that benefits you - not them.

Besides... the IRS budget has been decimated in recent years (gee... I wonder who that benefits?)? As long as your charitable contributions are aligned with your AGI - the risk of an audit due to including this is extremely low. And, questionable (IMO) as to why the donation of a week (not VOI itself) that has actual substantiated value would not be tax deductible.

IMO - not a tax expert, but at least a logical thinker.
also - no tax accountant or tax professional is going to tell you to take it when it is against tax code - especially when they are responsible for the tax filing.

Sadly, "logical thinking" is of little use when it comes to interpretation of the IRS tax code.

According to the IRS, it is clearly "not allowed": IRS Publication 526

"Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment."

 

[Ty1on]

Ok, I read the IRS rules (Pub. 17). Still don't get why it wouldn't be deductible in the scenario I described.

Their logic is that you own the interval, and pay maintenance fees as a matter of ownership, whether it is used or not, so you aren't really donating at an additional cost to yourself.

The analogy would be charitably allowing someone to stay in your guesthouse, that wouldn't be a deduction, because upkeep of the guesthouse costs you the same, whether it is occupied or not.

A contrasting write-off would be renting a hotel suite outright and donating that stay to a charity.

 

[TUGBrian]

it is indeed one of the more ridiculous rules in the tax code.

 

[DeniseM]

Brian - since this is a fairly common question, perhaps this could be added to the tax article?

IRS Publication 526

"Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment."

 

[antjmar]

Add: There's been discussion on TUG, with conflicting reports that RCI and II will/will not let you donate an exchange week to charity. If anyone knows what the current answer is, please let us know!

This past summer I donated a week to charity it was an exchange with RCI using Wyndham points. RCI told me it was permitted of course I had to pay the guest fee.

 

[tschwa2]

You can always donate/give a week to charity, even an exchange week. The part that really isn't allowed is for the charity to collect money in exchange for the doanted week. So if the charity wants to give the week to a family, clergy, or service person, teacher, etc. no problems according to the rci and II rules. If they want to make it a no cost door price for coming to an event, no problem. If they are bidding on it or paying for raffle tickets, you probably won't get into any trouble but, RCI's rules at least seem to say, that it would not be allowed.

 

[DavidnRobin]

Sadly, "logical thinking" is of little use when it comes to interpretation of the IRS tax code.

According to the IRS, it is clearly "not allowed": IRS Publication 526

"Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment."

Interesting - this is not exactly a Mandy White situation as she owns the vacation home for the entire year and is merely renting 1/52 of what she owns.

You are right about the logic. If I pay $2400 in MFs, and the true (documented) FMV of the rental is $2400 (for argument purposes) - then that $2400 goes to my ability to occupy that VOI for that week that is entirely owned (not partial interest). The only partial interest is compared to the entire year (1/52), but mine is 100% for the 1 week. So... not sure if I agree with the Mandy White scenario and her vacation home since Mandy can still occupy regardless of the 1-week rental. Whereas, I cannot.

PS - I do my own taxes...

 

[gmarine]

This is a link to a previous thread in which Dave M explains why there is no deduction allowed.

http://www.tugbbs.com/forums/showthread.php?t=25839

 

[DavidnRobin]

This is a link to a previous thread in which Dave M explains why there is no deduction allowed.

http://www.tugbbs.com/forums/showthread.php?t=25839

Thanks for the link - interesting, comes down to 'use of property' not being tax deductible. I can see why they do not allow - so easy to abuse and accounting issues. But, like many taxes, they do tax rental income from a TS (or partial interest) to be taxable income, but not a deduction. Typical...

I wouldn't donate one of my VOIs anyway as they have substantial value (aka vacation) - so doesn't matter, but obviously better to rent and donate the cash.

But then again...

 

[okwiater]

Couldn't the charity just rent the week from you in exchange for FMV, and then you voluntarily donate the cash back to the charity and take the deduction?

 

[Ty1on]

Couldn't the charity just rent the week from you in exchange for FMV, and then you voluntarily donate the cash back to the charity and take the deduction?

That would have the same net effect as just donating the week, because you would claim both the rental income and the charitable contribution, washing each other.

 

[DeniseM]

Also - I think you'd be hard pressed to find a charity that is going to be willing to pay money to rent from a donor, even if they are going to donate it back.

And agreeing to FMV would be problematic. In these charity rentals, I think timeshare donations often go for far less than that.

 

[LisaRex]

That would have the same net effect as just donating the week, because you would claim both the rental income and the charitable contribution, washing each other.

In this theoretical situation, if I pay $2000 in MFs and someone (including a charity) pays me $2000 for use of that week, then I don't consider that a taxable event, any more than I'd consider it a taxable event if I sold the Taylor Swift concert tickets to a guy on the street for face value. I'm not making any money, so I don't see why the IRS would care.*

Extending that logic, if I subsequently donated whatever money I received for the VOI/conert tickets to charity, then I'd feel free to write that off because I am now LOSING money.

Now the IRS might disagree with me, but I'd have no problem bringing that logic into an Auditor's meeting.

*Honestly, even if I made money on those concert tickets, I wouldn't report it to the IRS. There's honest and then there's crazy honest.