Owners of luxury motor coaches and RVs, such as Marathon Coaches and other high-end brands, can have the best of both worlds: a vacation with all the comforts of home, and an opportunity to shape their philanthropic legacy that also provides a current charitable tax deduction.
Luxury RVs and motor coaches generally qualify as second homes under IRS guidelines because they contain kitchens, bedrooms and bathroom components. This means their owners may gift their coach to a qualified charity in the form of a Retained Life Estate (RLE).
Here’s How It Works
Just like a traditional gift of real estate, a Retained Life Estate gift requires that the vehicle’s title be passed to the charity. The donor must first have a qualified appraisal completed on the RV to establish its fair market value at the time of transfer. The difference between that value and the estimated remaining life use value will be used to project the donors’ available charitable tax deduction.
For as long as the donor uses the RV, they are contractually required to pay registration fees, property taxes, utilities, maintenance, and insurance (naming the charity as co-insured).
| EXAMPLE | |
|---|---|
| Fair Market Value | $1,500,000 |
| Donor Ages | 69 and 72 |
| Estimated Remaining Life Use Value | $600,000 |
| Indicated Charitable Deduction | $900,000 |
| Tax Savings at 30% Combined Income Tax Rate | $270,000 |
A Bevvy of Benefits
The charitable world should explore this non-traditional gift form, because it represents a powerful asset:
- The value of used coaches ranges from $500,000 to $2,800,000.
- There are no holding costs or limited ownership risks if structured correctly
- Other charities haven’t yet connected the dots, so competition for these gifts is low.
- This is a flexible gift. Other gift options for luxury RVs include:
- Donor Advised Fund
- Creating either a Charitable Gift Annuity
- Bargain Sales
- Split interest gifts
- Luxury RV owners can enjoy substantial tax benefits from their gift.
Talk to your board and legal team today to see if accepting luxury RVs is right for your nonprofit. If not, your inaction will drive prospects to seek other charities that will accept this nontraditional gift form.
