You Need to Know the Fair Market Value When You Donate a Car to Charity

Although the laws were again amended in 2005 to counteract instances of tax evasion, it is still possible to "market value" of your car, boat, trailer, camper or truck that you donate to a non-profit organization (NPO claim). However, you need to make sure that you choose to "fair market value" in accordance with current legislation.

It is understandable that you consider that a value with Kelley Blue Book cited as the "market value" might be used - indeed, many tax advisers, as should be the case. But the IRS has different ideas to be used by the definition.

Many vehicles will be donated to charitable organizations in a state that could be described as relatively lower than the "bad". Some third parties, profits, agencies have been advertising for and accepting, cars, regardless of whether she ran or not. The lucky owner saved in the scrap yard fee, has picked up the car and then be free of the "market value was" as a deduction. It is estimated that this practice cost the IRS $ 640 million in 2000.

These practices, some agents skimming up to 70% from the top of the selling price in "service charges" resulted. The difference in the real value it soon became apparent when the vehicle was sold, and since most of them landed on the wholesale market, the difference was even more noticeable.

When using the Blue Book, even a "poor" rating requires the car to a runner. It is obvious that there is a big difference between what these cars would be if an advertisement was placed for sale in the newspaper, and what they described as "market value" had.

This led to the laws in 2005 is not changed. There is now a receipt for every gift with a value of more than $ 250 is required, as well as a written statement of the amount that the car is actually for (over $ 500) or the use that it put up for sale. This means that if the car is sold will be donated after the first application, you can only amount actually realized the love for the sale of the vehicle claim.

On the other hand, if instead of being sold, the vehicle is used, one can deduct the actual market value, calculated as the amount you get, you've actually sold the vehicle, instead of donating them. This means that when you gave your car to a needy person for his own use, your net worth could be increased many times.

Following this, if the car is from the charity during the first two years will be sold in the possession, love, need to give you a Form 8282, you can know what happened to your donated vehicle. You do not change anything on your taxes, however.

It is always a good idea, a series of photos of the vehicle taken from inside and outside, to back up any claims you make. If your vehicle is valued more than $ 5000, you need an independent assessment of writing to get your claim.

Note that many people selling price of older vehicles, quickly, so take this into consideration, what setting your "market value".

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