Used car Donations Drop Following Rule Change

Automobile Staff
Used Car Lot

Recent changes to tax laws have made Uncle Sam a far more frugal used-car shopper.

Donating a car used to be a win-win situation. You were able to avoid the hassle of a private sale, receive a nice tax deduction from the government, and get that warm feeling from doing a good deed all at once.

But the government grew tired of paying often inflated prices for used vehicles, and in 2005 the law changed so that any car, boat or plane donation above $500 would be deducted for its actual selling price, not its supposed market value. In other words, if you donate a car with a value of $8,000 to a charity, and that charity sells it for $750, you get the latter. There are exceptions, including one for cars that end up being driven by charities, but exploiting them requires careful paperwork.

Craigslist suddenly sounding much more attractive? You’re not alone. The well of charitable vehicle owners has dried up - used-car donations for 2005 dropped 67 percent.

Source: Wall Street Journal

i dont think this would want to make people donate cars anymore.
More Info:The American Jobs Creation Act of 2004 provides new rules that now limit most deddctions over $500 to the actual sale price the charity receives from selling the vehicle.However, you can still claim "fair market value" for a vehicle donation in excess of $500 if:1. The charity makes a significant intervening use of the vehicle - example, Meals on Wheels using a vehicle to deliver meals.2. The charity makes a material improvement to the vehicle, i.e., major repairs that significantly increase its value (with the exception of painting and/or cleaning).3. The charity donates or sells the vehicle to a needy individual at a significantly below-market price, and furthers the charitable purpose of helping a poor person in need of a means of transportation.Source:

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