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-   -   How does charitable car donation work? (https://www.thehulltruth.com/dockside-chat/358973-how-does-charitable-car-donation-work.html)

Joe 06-16-2011 05:49 PM

How does charitable car donation work?
 
I have a '98 Sentra with 128k miles I have been driving to work that is going to need some work. Rather than try and sell it for $500-$1000--and deal with the folks who would be buying a car that price--I'd just as soon donate it. How does that work?

Do they have to sell it first and let me know how much they get for it before I can deduct that amount from my taxes, or is it done from NADA or book value? I looked at the kidney foundation page and didn't immediately see an answer. Anyone done this? How does it work?

Flot 06-16-2011 06:00 PM

For you: I believe the way it is "supposed to work" now is that they sell the car and you get a donation write off for the amount that they sell the car for - and/or the blue book value of the car in its actual condition. When you file your taxes, of course, you effectively save ~30% of this value. So there is no real financial incentive to donate a car anymore, unless you think for some reason that you can't sell it for 1/3 of what it is actually worth.

Now, I happened to meet a gentleman who owns a towing company here in S Fl, and let me tell you how it worked for him:

He would get a call from the charity that said "go pick up a car at x address" - he said often they were estates being cleared out etc. Sometimes the charity knew what the car was, sometimes they didn't. He would go with a tow truck and pick it up. Once it got back to the yard, they had the first rights to buy - so if it was a car/truck they liked - they would offer the charity cash, somewhere in the neighborhood of half of what it was worth. If the charity declined, they would tow the car to auction and be done with it. The charities he worked with had absolutely no interest in owning a car, so he said most of the time they would take his cash offer and be done with it. He of course would fix anything broken, and resell the car to local mom and pop dealers for a handy profit.

He said the majority of the cars they got were junkers and/or not running or in remotely the condition they were supposed to be in - but that occasionally they got a gem - everything from 60s musclecars to vehicles that still had that new car smell.

Just something to think about. I was reminded of the time years ago when I donated a hundred hardbound books to a library, and the next week saw them on sale for $0.15 each.

Be honest about the condition, price it literally at half of what its fair value will be, and someone will take it and you'll come out ahead.

Joe 06-16-2011 06:29 PM

The car might be worth $1000..maybe less. A/C doesn't work, headliner is falling down, and today, it started acting as if it may need a new starter. I paid $300 for it from a neighbor who was moving--I honestly have no incentive to put much, if any, money in it.

About 13 years ago I "inherited" a car from my grandmothers estate. I say inherited..'cause noone else wanted it, so I got it. It needed tires, a paint job, ran like crap, and when the a/c died..I decided to sell it. I was asking $1200..and most folks who called about it wanted me to finance it for them..and one young lady, who lived in public housing, wanted me to bring it to her to show it to her. The dude who ended up buying it wanted me to deduct for all the work it needed-had I done that I would have owed him the car and about $1500. I think I eventually sold it for about $900 because I finally told him "that's the price, take it or leave it". A few weeks later he kept calling me asking me about stuff that was wrong with it. I eventually told him to quit calling me..he paid $900 for it--and it's not new. The point here is, I'm sure i can sell it, but I'm not sure I really want to deal with the folks who are looking for a $1000 car.

rehookdup 06-16-2011 07:14 PM

donation loop holes closed afew years ago, be cautious of a high dollar donation credit, because if sold with in 2 years, you will be hit with a minus!!!!!

38Blackfin 06-16-2011 07:34 PM


Originally Posted by rehookdup (Post 3825390)
donation loop holes closed afew years ago, be cautious of a high dollar donation credit, because if sold with in 2 years, you will be hit with a minus!!!!!

x2.

We help out several of the local churches and charities, the rules tightened up significantly a few years ago. Check with your accountant before you assume a write-off $$ amount.

Randy

iFly 06-17-2011 12:16 AM


Originally Posted by Joe (Post 3825259)
...The point here is, I'm sure i can sell it, but I'm not sure I really want to deal with the folks who are looking for a $1000 car.

For me, the biggest point to get across to you is transfer of title. Even if the car is only worth $25 dollars, make sure you move the car out of your name. I have heard (and was close to being mixed in the middle of) some nasty situations. If you give someone a car and it is not transfered out of your name and someone gets hurt in the car, the cops (and lawyers) will come knocking on your door. Under NO circumstance do you take the word of a tow truck driver or charity director that the title will be transfered out of your name. YOU do the paperwork or YOU will remain liable for anything that happens in association with the car.

Just trying to help. ;)

Halfmoon 06-17-2011 03:49 AM

If you have a Carmax near you take the title and a ride home with you. I have sold three cars to Carmax two needed work and had over 150,000 miles on them.

LI Sound Grunt 06-17-2011 04:30 AM

There are several pro financial accountant and tax guys here Tprice and Sprokets - wait till they chime in . I remember a recent thread on this and as said above they closed this loophole to a large degree.

bamaboy473 06-17-2011 04:36 AM


Originally Posted by iFly (Post 3825676)
, make sure you move the car out of your name.

YOU do the paperwork or YOU will remain liable for anything that happens in association with the car.

;)


Your point is well-taken, but please explain the mechanics of YOU registering the car for a buyer? How would you assure yourself that the car is re-registered?

P.S. proof of sale is enough for cops. Make sure you take a copy of the buyer's DL for your records. Many states tell you to remove your license plate, too.

Joe 06-17-2011 08:57 AM

I may try the carmax idea. Let them deal with it.

iFly 06-17-2011 11:28 AM


Originally Posted by bamaboy473 (Post 3825781)
Your point is well-taken, but please explain the mechanics of YOU registering the car for a buyer? How would you assure yourself that the car is re-registered?

P.S. proof of sale is enough for cops. Make sure you take a copy of the buyer's DL for your records. Many states tell you to remove your license plate, too.

Registration and title are separate (in my state). I only mentioned "title". You bring up a new topic, "registration". ;?

But, as you say, the point is to make sure you have the paperwork that proves you no longer own the car. ;)

dssmith 06-17-2011 11:29 AM


Originally Posted by Joe (Post 3825148)
I have a '98 Sentra with 128k miles I have been driving to work that is going to need some work. Rather than try and sell it for $500-$1000--and deal with the folks who would be buying a car that price--I'd just as soon donate it. How does that work?

Do they have to sell it first and let me know how much they get for it before I can deduct that amount from my taxes, or is it done from NADA or book value? I looked at the kidney foundation page and didn't immediately see an answer. Anyone done this? How does it work?

A junk yard might buy it for $300-400 bucks. Call one. It is just as easy as taking in the title and they give you a check. You can then buy a dinner or give the cash to your favorite charity. This transaction will be completed in about 10 minutes.

Joe 06-17-2011 11:33 AM


Originally Posted by dssmith (Post 3826728)
A junk yard might buy it for $300-400 bucks. Call one. It is just as easy as taking in the title and they give you a check. You can then buy a dinner or give the cash to your favorite charity. This transaction will be completed in about 10 minutes.


Not exactly the same thing....


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