By Marc C. Shaffer
We recently worked with clients who owned a beautiful vacation property they rarely used…
It was meant to be a relaxing getaway, but over time, life got busier, the kids grew up, and the place sat empty most of the year. Even when it went unused, the bills still came: property taxes, maintenance fees, insurance costs, and cleaning expenses after each visit. They weren’t ready to sell, but they also didn’t like seeing it sit idle.
That’s when we suggested an alternative idea: use the property to support a cause they care about.
The Power of Donating a Stay
Instead of gifting the entire property, they decided to donate a two-week stay at their vacation home to a local charity for use in a silent or live auction. It turned out to be one of the most popular items at the event. Who wouldn’t love a week in the mountains, a beachside retreat, or a cozy lake house getaway?
The charity raised thousands of dollars from the winning bid, and our clients loved seeing their property make a meaningful impact while they retained full ownership.
Even better, there can be tax advantages when structured thoughtfully.
How It Can Work
When you offer your vacation property for a charitable auction or raffle, you are providing a right to use the property rather than transferring ownership. The IRS rules around deductibility depend on how the gift is handled, but here are a few examples of how it might look:
- If the charity auctions off the stay directly, they receive the funds from the winning bid. While the value of the stay itself is not tax-deductible to you (since it is considered a use-of-property donation rather than a cash or property gift), you may be able to deduct any direct out-of-pocket expenses tied to the donation, such as cleaning or maintenance costs.
- If you rent the property yourself and then donate the proceeds to a qualified 501(c)(3) organization, that is treated as a cash contribution, which may be deductible. For example, if you rent your home for $4,000 for the week and donate those proceeds, you could potentially take a charitable deduction for that amount, subject to IRS rules and documentation.
A Real-Life Example
Imagine your family owns a lakefront condo valued at $400,000.
You typically use it only a couple of weeks each year, but it’s a great rental spot in the summer. Instead of renting it out for one of those weeks, you choose to donate that stay to your favorite local charity’s annual fundraising gala.
The winning bidder pays $5,000 to the charity for the weeklong stay. You cover the $300 cleaning cost and ensure the home is ready for guests. The charity receives $5,000 to support its mission, and you experience the joy of seeing your vacation home help make a difference.
Depending on how you handle the donation, you may be able to deduct the cleaning costs or, if you rent and donate the proceeds instead, take a full cash deduction for the amount donated.
Why This Makes Sense
- You control the terms. Choose the week, number of nights, and any restrictions that make sense for your situation.
- You create real impact. Nonprofits appreciate unique auction items that stand out and often bring in strong bids.
- You make use of something that might otherwise sit empty. Rather than letting your property go unused, it becomes a tool for generosity.
- You strengthen community connections. Participating in charitable auctions and events often connects you with people and causes that align with your values.
A Word on Taxes
The IRS does not allow a deduction for the fair rental value of a donated stay, but you can still make your giving tax-efficient by:
- Deducting direct out-of-pocket expenses related to the donated stay, such as cleaning or repairs.
- Renting the property yourself and donating the proceeds to the charity, which can qualify as a cash contribution.
- Combining both approaches to maximize the impact now while considering future charitable plans, such as establishing a donor-advised fund or including the property in your estate planning.
Making an Impact with What You Already Own
You do not have to write a big check to make a meaningful difference. Sometimes generosity starts with simply using what you already have.
If you have a second property that is underused, consider donating a week or two to a cause you care about. It is a simple and creative way to give back while helping nonprofits raise valuable funds for their work.
If this idea resonates with you but you do not already have a nonprofit in mind, we have many we care deeply about and would be happy to connect you with organizations making a difference in our community.
Our team at Searcy Financial® Services and Allos Investment Advisors can help you evaluate how a vacation property fits into your broader financial and charitable giving plan, ensuring your generosity aligns with both your heart and your long-term financial goals.