Determining the Value of a Donated Car

Donating an unwanted car or other big-ticket item, such as a camp trailer, is an excellent way to get a good-sized deduction on your income taxes.
If you do own an older car or trailer and plan to donate it to a charity or non-profit group, you will need to know the value of the vehicle in order to deduct the donation. Determining the value of a donated car has been simplified for taxpayers. Since January of 2005, it isn’t necessary to assess the donation according to the blue book value, or the amount for which you would be willing to sell the vehicle. You needn’t ask a local used car dealer him how much you could get for the car, or spend time researching used car values on the Internet.

An estimated deduction on federal taxes for car donations is allowed for items of up to $500 in value. For deductions over $500, the value of a donated car is the amount received by the charity when it is sold. According to the 2005 law, the charity is required to provide a receipt for the item when it is donated, and advise the donor in writing at the time of the sale how much was actually received for the vehicle. This new regulation benefits both the donor and the charity, as it relieves the vehicle owner of the task of determining how much to deduct, and gives the charity a true value to show as income.

Some non-profit organizations may appreciate an estimated value when determining the value of a donated car, to know how to price the vehicle. Others are accustomed to such donations and know how to research vehicle values for themselves.
Since there may be a lag between the time the vehicle is donated and when it is sold, you will need to consult your tax advisor as to when you may take the deduction.

Author: L. Kaylen, Car Donation & Deduction Service Reviews