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Car Donation Explained

What can be more noble than donating your old car to charity? You save yourself the hassle of having to sell the old used vehicle outright. You donít have to run an ad, answer the phone calls regarding the car, and stay home to show the car. You donít have to worry about test drives, bad checks or who is going to knock on your door. You can avoid all of these problems by donating the car to charity and obtaining a tax deduction for the donation. Beware! Part of this tax loophole has been closed. Before you donate a car to charity you should know what the relevant tax laws are.

It used to be that the taxpayer who donated a car to charity could deduct the fair market value of the vehicle. Now the allowable deduction is 0 for a car donated to charity if the charity sells the vehicle, which most charities do. You cannot deduct the fair market value of the donated vehicle unless certain conditions are fulfilled. The charity must make improvements to the car and give it to a needy person. If the charity does this with your donated vehicle and it is documented, then you donor can deduct the fair market value of the vehicle. This is also true for planes, boats, and other vehicles. Specific tax forms have to be filled out and filed in order for the fair market value deduction to be allowed.

An internet search reveals that almost every charity will accept the donation of cars and other vehicles. They make it very simple for the donor in that all the donor has to do is to sign over the title. The charity handles the pick-up and transportation of the vehicle. Most charities then sell the car at auctions like E-Bay. The money from the sale is then used for their charitable works. Some charities, like the Salvation Army, have their own used car lots where they sell the donated vehicles. This is the situation that results in a 0 tax deduction for the donor.

Some charities accept car donations and use them for occupational training for the disadvantaged. They fix the cars and make improvements and then give the car to a needy individual. This kind of situation results in people receiving occupational training and a needy individual receiving a functioning car. This is the situation where the donor can deduct the fair market value of the car.

About the Author: As the creator of Donation Guide, I urge you to visit our website today if you are seeking information on Donating a Car. We promise you wonít be disappointed with what you find.

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