Fair Market Value for Donations: Vehicles for Change

When you donate your car to charity, make sure you know whether or not the charity can offer the fair market value for donations. Previously, determining the amount of a tax deduction for a car donation used to simply require knowing the value of the car, but now it is more complicated. Since people used to claim their car was worth more than it was, there has been a change in tax deduction protocol.Now, the amount of a person’s tax deduction for their donated car depends on the value of the car and how the charity uses that vehicle. For example, a car donation company that auctions cars to the highest bidder may only get a few hundred dollars per car, even though the cars’ value may be $3,000 or more. In these cases, the IRS will only offer a tax deduction for the amount of the car’s sale at auction.

Fortunately, some car donation charities do not merely sell the cars at auction to the highest bidder. For some charities like Vehicles for Change, cars are repaired and sold to low income families at a much reduced price. If their car is sold to a low-income family at a significantly reduced price, the donor can claim the fair market value for their donation. There are a number of ways to find the fair market values for donated cars, including the following:

  • Get the car appraised. A car dealer or auto mechanic can take a look at your car’s engine, computer, and all of its other functioning parts to give you an idea of how much the car is worth. Age, gas mileage, and general wear and tear all factor into this evaluation. Make sure the person appraising your car is trustworthy.
  • Check online sources. Kelley Blue Book or similar online guides offer estimates for car’s value based on a variety of factors, including the current market, the age of the car, the model, the mileage, and others. This may not be as accurate an evaluation or price estimate as a professional will give you after inspecting a car, but it can be done for free.
  • Find records of similar cars. If you can find what cars of the same make, model, and year as your car sold for, you will have a good idea of what your car’s value is.

At Vehicles for Change, cars are acceptable in nearly all conditions. This includes cars that can be reconditioned for less than $1,000 and provide at least 24,000 miles of service or those that only need one major repair. These cars can be sold to low income families and at normal retail prices, and the donor can claim the fair market value for donations. Contact Vehicles for Change to learn more about getting the best value for your donation.