Donated vacant house for fire/burn training purposes - can we deduct an appropriate amount as a donation for use of training fire personnel?

Forum|Forum|7 years ago
June 1, 2019
8 replies
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We donated a vacant house for fire/burn training purposes. Can we deduct an appropriate amount as a donation for use of fire personnel to train?

Several fire departments participated over 8 weeks time. I'm thinking about 400 man hours of training use. If they had to pay for the use of a structure for training, I believe it might cost $50 per man hour. Is this acceptable?

Opus 17

Level 15

Sorry, no. As with any other charitable contribution, you can not deduct the amount of money you might have saved the organization, you can only deduct the fair market value of the property that was donated.

Some special rules apply to real estate and whether it was used previously for business or rental. If this was personal property and it was worth less than you originally paid for it, you can only deduct its fair market value at the time of the donation. If it was worth more than what you paid (although this seems unlikely under the circumstances), and you held it longer than one year, you can claim the fair market value. If you held it less than one year, you can claim the amount you paid.

If this was income-producing property and you previously claimed depreciation on it, you can only claim the remaining (residual or non-depreciated) basis in the property, regardless of how long you owned it.

Also remember that in all cases, the value of the land is separate from the value of the structure. If you kept ownership of the land, then you can only deduct the value of the structure. If you also donated the land, then you need to figure the value of the structure and the value of the land separately. The value of the structure is determined according to the rules I mentioned above. The value of the land is either what you paid for it (if you held it less than a year) or the current fair market value (if you held it more than a year). The value of the land is not affected by any prior depreciation since land does not depreciate.

bwa

Alumni - Champ

I agree with Opus - While there has been some controversy in the past over this type deduction, the US Tax Court (in, fore example, Patel, 138 T.C. No. 23 (2012)) has pretty much cleared that there is no deduction allowed. Several reasons include that the owner had a benefit (getting rid of an unwanted building) and that the donation was not the contribution of a full interest, as the owner retained the land.

bibleladyAuthor

Level 2

Just wanted to add some detail to my question above.

First, we purchased the property hoping to rehab it and rent it out. So, we did file and pay the required fees at closing to change the house to rental space.

I'm also not trying to claim the full price of the building. My charitable deduction would only amount to $7,000 to $10,000. (The house itself was probably only worth $90,000 to $100,000.) But your answer made it seem that I can't claim a donation that is not cash or material. Couldn't this be a donated service - allowing them to use the structure over and over again for training?

Also, the value of their taking the house down is minimal. We had to do all the preliminary work of striping the building of everything - and I mean everything - that was recyclable. And after the burn, we needed an excavator to clear all the debris and a special service to haul it all away to a proper disposal area. If they hadn't used the house for training, we would have knocked it down our selves.

It was a lot of work - but we had a lot of fun watching and working with all the fire departments. Thanks for the opinions. Very helpful!