Philanthropy using STR

[Audrey C.]

I've been thinking about purchasing my first STR. I currently manage a STR in another state in a sought-after beach community for a friend. She pays me to manage it and all the proceeds after expenses she donates to a non-profit. She is an amazing woman and the house is fully booked from repeat guests through direct booking. I also just purchased my first LTR last year, a SF home.

I'm not in a position to donate ALL cashflow for philanthropic goals, but am trying to figure out how I can have a combination of rental income, donate a couple of weeks per year to a non-profit organization I support, and have my family be able to use the property a couple of weeks a year. I know this is possible! But I'm in analysis paralysis to underwrite a deal to know what metrics I need to look at to even get started. I haven't talked to my tax accountant yet, but - is there any benefit to "donating" the FMV of lost business income? The house I manage brings in over $13k/week and only for a short spring to fall season - but enough to make a significant impact. Of course a bigger house brings a bigger pricetag, bigger problems/expenses. I'd ultimately like for the property to pay for itself (including paid management) I am fine with the cashflow being eaten up by philanthropic efforts. Looking for some guidance and direction!!

[Collin Hays]

When you "donate" use of the place, you are already effectively benefitting from a tax perspective, because you have no income to pay tax on during that period.  Thus, zero income resulting in zero tax. 

If you did "donate" $2000 worth of stay to a local non-profit, and you booked that as income and then later deducted it as a charitable donation, you'd be right back to where you started - zero income resulting in zero tax.