Donation of Used Autos to Charity
One of the negative aspects of buying a new car is the annoyance
involved with getting rid of your old car. Many individuals find the trade-in allowance
offered by dealers (if any) to be well below the car's true value. But the alternative of
selling the car on your own involves the expense of advertising as well as the commitment
of time needed to meet with potential buyers, accompany them on test drives, negotiate a
fair price, etc.
For these reasons, you may want to consider a different option for
your old car: donating it to charity. Under this approach, you will be entitled to a
charitable deduction equal to the fair market value of the car. The value is usually set
according to the “Blue Book” listings for used cars published by the National
Automobile Dealers Association. In some cases, this value will exceed the amount you could
actually get on a sale. If the car is in terrible condition, however, and is worth much
less than its “Blue book” value, you must use its true market value, not its
“Blue Book” value.
The donation approach saves you the trouble involved with trying to
sell the car. Many charities even offer the added convenience of picking up the car at
your home and saving you the trip.
Proving your right to the
deduction. If you donate your used car to charity, make sure you take the steps needed
to substantiate your tax deduction. First, you need a written acknowledgement from the
charitable organization stating that you made the donation, describing the car, and noting
that the charity provided no services in exchange for it.
Second, if the value is over $500, Form 8283 must be attached to your
tax return showing when and how you acquired the car and its original cost. If the value
is over $5,000, special rules requiring an appraisal apply.
If you'd like to discuss this approach further, please call.
J. Briscoe Gassaway, III CPA/MSA
252/443-0551