Curious how it works and if it's worth the tax benefits..Please discuss.
Curious how it works and if it's worth the tax benefits..Please discuss.
What I think I know...
A few years back the tax rules changed. It used to be that you could claim your old hoopty was worth an arbitrary, book value and use that for you tax deduction number. Lets say you said grandpa's old Toyota Avalon was worth $3k and you then took a $3k tax deduction.
Now, all you can deduct is the actual value that the vehicle sells for at auction.
In my case, through IAA, I once bought a 2002 Avalon w/168k miles. The car was a "charity donation" through some veterans group. The brake pedal went all the way to the floor (I figured MC, turn out to be ABS pump.) As such, the car was listed as "Salvage Title". I think this was because the charity did not want to imply that the car was "safe."
I bought that Avalon with a winning bid of $375. With fees from the auction place my total was $508 but all that would go to the Charity was the $375. This means the tax deduction on this car was just $375. Hardly worth it. I wonder who paid the tow bill. If the tow bill was paid by the "seller/donator/individual" then the tax break on $375 was less than the tow. In the charity paid the tow bill then lets guess $100 tow- $375 = $275 went to the charity. A nice pay day for the charity considering that any dollar was an extra dollar.
My moral here is don't think the tax break will make a difference for you. It throws a couple of bucks at your charity but they benefit from it far more than you do; and that is nice if you like the charity. It also is a clean way to make a car go away...right away. That is probably the greatest benefit to the owner.
This Pickle was just bought by Evan via Goodwill for $750. I'm not sure if the full $750 is what the tax deduction is based off.
Is the car you have as nice and as complete as this Subaru? If this is what $750 brings will yours bring more or less?
This Subaru was probably a clean title, not salvage title like mine.
John Welsh said:What I think I know...
A few years back the tax rules changed. It used to be that you could claim your old hoopty was worth an arbitrary, book value and use that for you tax deduction number. Lets say you said grandpa's old Toyota Avalon was worth $3k and you then took a $3k tax deduction.
...which you can only get if you itemize, and given the recent bump in the standard deduction, many people no longer itemize.
In reply to ProDarwin :
^THIS
So, I think it is agreed that Goodwill is good if you need the car cleanly out of your life NOW. Or, the Goodwill route is good if you would like to benefit the efforts and programs of Goodwill.
But, if you are trying to maximize your personal financial benefit, you are better off just selling the car. CL or FB could maybe make it go away quickly if the price is low enough (and you are willing to accept whatever they offer.)
Another route is that auction places like IAA sell privately owned vehicles too. I am pretty sure there is no cost to the seller for listing a car with them. IAA makes their money from the buyer's fees. You can even have a hidden reserve on the selling price. You might find a local auction place, like a farm auction type thing that will sell the car for you too. In both these cases, you might need to tow/deliver the car to the auction place
Thanks guys. The car in question is my 98 rav4. It both leaks and burns oil so I think it would be a tough sell. Thought maybe donating it would be the way to go but seeing the points made above about only actual sale price being able to claim then also the point about itemizing makes me reconsider.
I guess my options are to keep topping it off with oil or deep discount it and take a loss. I moved it to back up car status when I bought the xb so I don't even drive it that often.
Thanks again
Is it auto or manual?
From my experience at auctions (goodwill and voa), cars older than 2000 don't bring over $1000. The cars that sell for more are newer appliances that the dealers buy for a quick fix and flip. Or trucks, they always sell for too much.
In reply to EvanB :
5spd manual.
If it is also awd I might be tempted to make an offer.
I'd always heard donating your car was a great way to get audited. Is that no longer the case or was that just an old wives tale?
Goodwill takes and sells cars? Had no idea
A Rav4 is about the easiest used car to sell. Flippers will jump all over yours if you list it on CL/FB. Take a look and see how high similar models are selling on CL/FB
Keep in mind a deduction is not a CREDIT.
10 times out of 9 you’d be better off selling it or scrapping it, unless your main concern is the “charity” part, at which point, you’re better off selling for top-dollar and giving the cash to a REAL charity (NOT GOODWILL,) vs having goodwill auction it for $100...a tiny portion of which will actually go to those who need it.
Antihero said:Goodwill takes and sells cars? Had no idea
Not everywhere but many do. Probably has to do with state laws as well as the capabilities of the local chapter. Here, even Public Radio will take your car as a donation.
Public Radio then sends the cars off to IAA who pushes them through their auctions.
After the engine overheated and failed we sold donated our E39 to a local charity who received only $500 for it at auction. I could have made much more money parting it out, and since we didn't itemize on our taxes that year we received zero write off from the donation.
Donating was useful to get the car out of my garage, but I probably wouldn't do it again.
In reply to EvanB :
Yes. 5spd awd. Very difficult to find this combo but that's what I wanted.
John Welsh said:A Rav4 is about the easiest used car to sell. Flippers will jump all over yours if you list it on CL/FB. Take a look and see how high similar models are selling on CL/FB
I'd agree but this one is a 98' with a 5spd. I've always hated selling manual transmission cars. Few know how to drive them and even the ones that do opt for autos because there are so many.
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