All this week I'll be answering last-minute tax questions as part of Marketplace Money's special report on tax season. This next question comes from Ira in Los Angeles, Calif.
We own a rental home, which we rent out for $1,500 per week. We donated that home to two different 501(c)(3) charities this year, so they could auction off a week for each. One person paid $250, one paid $650. Can we deduct the market value of a week's rental for $1,500 from our taxes, or can we deduct the above mentioned total of $900 from our taxes, or can we not do either?
ANSWER: Not many tax questions can be answered in a single word but this one can -- NEITHER! You have given what is called a partial interest in property and these amounts are not deductible as charitable contributions. IRS publication 526 has an example very similar to your question.
I suppose there is some good news here. You don't have to claim the $3,000 for rent which you never received. Perhaps a small consolation but keep up your good support for these charitable organizations.
Frank Degen, EA is a self employed practitioner in Setauket (Long Island), New York. He has a Bachelors degree in mathematics from Iona College and a Masters degree from Johns Hopkins University. He became an Enrolled Agent in 1984. Degen, served a three-year term on the Internal Revenue Service Advisory Council (IRSAC) and was Chair in 2009.