9072 / What deduction is available when a taxpayer only grants the charity the right to use property, rather than donating an ownership interest in the property?

Example: Stephen owns a beautiful vacation home on the beach. He typically rents it for $3,000 per week. He offers his favorite nonprofit the right to use his vacation homes for a week-long board retreat. Stephen is not, however, able to deduct $3,000 for the nonprofit’s use of the vacation home for the week.

However, in some cases, a deduction has been allowed for the costs of repairing and maintaining property owned by the taxpayer but used by the charity. These deductions have been allowed as contributions “for the use of” the charity.² Despite this, the IRS has denied a deduction for maintenance and repair costs in other situations.³ To be deductible, the costs must be unreimbursed expenses “directly attributable to the performance of … volunteer services.”⁴

A taxpayer was not permitted a deduction when he donated a week’s use of his vacation home in connection with a charitable auction, the proceeds of which benefitted charitable organizations. The IRS also noted that the successful bidder would not be permitted a charitable deduction to the extent that valuable consideration is received in return (i.e., the bidder paid fair rental for a week’s use of the home).⁵

Tenant-stockholders were allowed to exclude $500,000 of gain from the disposition of their shares of stock in a cooperative apartment which was coordinated with a donation of the same shares to a charitable organization.⁶