When it’s time to get rid of a car, there are plenty of options: Trade it in, sell it to a private party, give it to a child, and so on. However, car donation is a good option for owners who want to do something for charity as well as benefit from a tax deduction at the same time. Here is how to donate a vehicle as well as some pros and cons of doing so.
The first thing to do is decide what charity/cause to support when donating a vehicle. There are a number of charitable organizations that run their own car donation programs, including Purple Heart (which helps veterans), or the National Kidney Foundation. Most charitable entities, however, do not have their own donation program.
If there is a cause that interests you, and the charity does not have their own donation service, there are many other donation groups that take cars, sell them, and send the proceeds to the charity of the donor’s choosing.
To receive a tax deduction for a donated vehicle, the donor must choose to itemize their deductions on an income tax form. When doing this, the individual is allowed to deduct the full price provided it sells for over $500. If it sells for less than $500, the donor is allowed to decide whether to deduct what he/she considers to be the fair market value (as long as that amount is less than $500) or the price the car sold for.
It should be noted that donated cars are sold for less than what one might get selling it to a private party, as the charities are more interested in selling the car than obtaining a great price for it.
Selling your car privately will generally yield the greatest return. But donating your car can be a better option (sometimes) than trading it in, or investing in costly repairs. Trade-ins usually don’t net a good price from a dealer, and the ROI on repairs is unknown depending on vehicle condition and mileage. In many cases, donating a car is simply a better investment, and we can feel good about it.
Free Car Donation Services
Most car donation companies will tow your car for free, running or not, and handle all necessary paperwork. The process is simple and costs nothing.
Check out the car donation video below to learn more.