RadioBDC Logo
Kangaroo Court | Capital Cities Listen Live
 
 
< Back to front page Text size +

Donating your car to charity? Know the rules

Posted by Cheryl Costa  September 29, 2008 10:44 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

At least once a month a client or friend will mention that they are thinking of donating their car to a favorite charity. Most think they can get a tax deduction equal to the book value of the car they are donating. They are wrong.

Three years ago, the rules pertaining to donations for cars changed dramatically. Before 2005, you could donate your car and take a tax deduction for it. The amount of the deduction was equal to the fair market value of the car at the time it was donated.

In 2005, the rules changed and now when you donate your car, you still get a tax deduction, but the amount of the deduction is equal to what the charity sells the car for. That can be significantly less than the fair market value. As with all tax rules, there are exceptions. One is that if the charity keeps your car and uses it, you are still able to deduct the car's fair market value. Also, you can deduct the car's fair market value instead of its ultimate sales price if the value is $500 or less. Before you donate your car, you might want to ask the organization if they will be keeping or selling your car. It could make a big difference to you at tax time.


This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

ABOUT MANAGING YOUR MONEY
Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

About the contributors

D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
Financial Planning Association™ of Massachusetts has 900 members who specialize in the financial planning process. Many of its members engage in philanthropic pro bono work in their communities, recommend legislation, elevate public awareness, promote financial literacy, and advocate for sound economic and tax policies.
Odysseas Papadimitriou is the founder of CardHub.com, a credit card and gift card marketplace, and WalletHub.com, a personal finance site. He has more than 13 years of experience in the personal finance industry, and previously served as senior director at Capital One.

E-mail your question

Name:
E-mail:
Your question/comment:
archives