When youâ€™re trying to decide whether to keep, sell or donate a vehicle you no longer need, thereâ€™s no denying that one of the biggest considerations is finances. You have to think about the costs of keeping a car versus the costs of trying to sell it, the financial reward of selling versus the potential car donation tax deduction of giving it away, etc.
Because these answers vary in different situations, knowing if it makes financial sense for you to participate in vehicle donation can be a complicated matter.
How do you know which decision is right for you?
When does it make the most financial sense to donate, and when does it make the most financial sense not to?
To help answer these questions, hereâ€™s a look at some of the most important financial considerations involved with car donations.
Keeping vs. Selling vs. Donating
In terms of financial, time and energy costs, there are pluses and minuses no matter what you choose to do with your vehicle. Think about it:
Keeping a car means you own a car, but it also means you have to pay to store, insure and maintain it.
Selling a car frees you from those costs, while also making you a little money, but it can bring a variety of hassles, headaches and, depending on the condition of your vehicle, potentially not a lot of resale dollars.
Choosing to donate, on the other hand, wonâ€™t earn you any money, but it could qualify you for a tax deduction; itâ€™s also quick and easy.
The Resale Value of Your Car vs. a Potential Tax Deduction
When youâ€™re Interested in knowing the difference between what you could get in a vehicle sale versus what you could get in a tax deduction, there are several things to consider:
The estimated resale value of your car: The make, model, age and condition of your car all play into its potential resale value. You can look up its fair market value through a vehicle valuation website in order to get a rough estimate of what someone might be willing to pay; however, if the number is low, going through the selling process might not be worth your trouble.
The estimated potential tax deduction: When it comes to car donation tax deductions, a lot of people think you can just deduct the Kelly Blue Book value. This isnâ€™t actually the case anymore â€“ since 2005 actually. These days, you can deduct the selling price of the vehicle or what the vehicle brings at auction.
The Costs of Trying to Sell vs. the Costs of Car Donations
The potential profits arenâ€™t the only financial matter to think about â€” you also want to think about potential costs. If you try to sell, for example, you could spend money on advertising, showing and/or transporting your vehicle. If you try to donate, you likely wonâ€™t have to spend anything, especially if the charity handles all the towing and logistics.
Does it make financial sense to donate your car? In some cases, the answer will be no; in others, it will be yes. Use the information above to determine whatâ€™s best for you. Keep in mind, too, that the financial aspect of a donation is only one component; giving away a car also gives you the intangible benefit of knowing youâ€™re helping someone who could use extra support.
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