Two Reasons To Donate Cars, Boats And Planes To Charity

Taxes

Donations of vehicles can have limited tax advantages compared to donations of appreciated assets such as business interests or real estate. After the passing of the American Jobs Creation Act of 2004, most taxpayers are restricted to a charitable deduction amount equivalent to the gross sale proceeds from the charity’s sale of a vehicle rather than the fair market value of the property.

This does not mean that vehicles cannot be donated or cannot greatly benefit charities. IRS regulations do allow for some fair market value claims as an exception in some cases. Individuals planning on donating a vehicle should still consider some of the practical implications for donating such property.

1. Your gift can benefit a charity you are passionate about

While a large tax benefit can impact a donor’s decision to contribute their appreciated assets or vehicles to charity, most donors’ primary motivation for donating is rooted in their charitable inclinations. Whether a donor has a general desire to participate in charitable giving, or whether there is a specific charity a donor has in mind, there is fulfillment to the donor and the benefitting charity when such gifts are made.

The benefitting charity can utilize the proceeds received from the gift. In some instances, the charity can use the gift itself for its own charitable purposes – cars can be more useful than stock in this regard! For example, some charities may be able to accept an automobile gift and use it for the purpose to bring meals to those in need or for another reason in line with their charitable mission.

2. Your gift may allow you to avoid selling the car yourself

Many donors who consider donating vehicles to charity have a specific vehicle in mind for one reason or another. Donors may own an automobile that is part of a larger antique collection they are finally ready to dispose of, or a boat they no longer want to maintain (after all, a vehicle donation is not limited to only automobiles!). Instead of undertaking seller’s obligations for the property, such as creating and paying for ads, holding showings, and engaging in negotiations, charitably-inclined individuals with such property can be attracted to the idea of a charity recipient willing to undertake these obligations.

Donors can also be attracted to the idea of gifting a vehicle to charity if there are pieces to a potential sale of the property that would be a bit trickier or unfamiliar to donors. Charities who can accept such gifts are often teamed with experts who may be better equipped to deal with such issues.

Although there are some tax aspects to donating vehicles to charity that are less favorable than some other non-cash assets, there are still practical implications to keep in mind when considering a donation of a vehicle. The charitable result and the avoidance of the hassle in selling may still be the best route for some charitably-inclined individual with such assets.

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