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Things To Consider On Donating Vs Selling

Would you consider donating your car to charity? Getting rid of an old car by donating is an easy way to get rid of it quickly, but you must be sure that the donation is for the right reasons. A donation of a car will not give you a large tax break, so you might be better off selling it the traditional way if you're in it for the money.

Donating goods and money to a worthy cause and also saving money on your tax returns is a great idea. Car donations are no different. Car donations are still a wonderful way to help those in need, even though some of the laws changed a few years back. Consider donating your vehicle to charity if you have an old car that you're not sure how to dispose of.

Every year, we sell more than 500,000 old cars in the United States. As a result of this high number of sell-offs, many people are left wondering if they should sell their old car or donate it instead. If you're one of these individuals and want to make an educated decision before selling your car or donating it, read on for some helpful advice!

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Things To Take To Account On Donating Vs Selling

Pro's Of Selling Your Car Privately

1. A Higher Payout

You can get the full market value price for your car when you sell it to a private party. This means that you are cutting out the middleman. It is very easy to make a financial gain of hundreds or even thousands of dollars.

Selling to a private party is especially advantageous if your car has a lot of miles and is an older model. Dealers have a harder time selling older cars on the lot, which is why they tend to command lower trade-in values. You will be able to get a deal that reflects the true market value of your used car by selling to a private seller.

2. The Process Will Be Under Your Control

It can take a long time to sell a car to a private party, and it is sometimes tedious. Although you are in charge of the process from beginning to end, the upside is you are in complete control. An unsatisfactory bid can be simply declined, and you can wait for a better offer to come along. The value of your car can be improved if you receive bids that are consistently lower than you would like. The ball is always in your court when negotiating a trade-in, but that's not the case when selling a used car.

Con's Of Selling Your Car Privately

1. It Takes Longer

You can't predict when you'll receive an offer when a private-party sale happens, and they don't always happen overnight. You should not use this approach if you plan to earn cash from a sale quickly.

2. It Takes Time And Effort

To successfully sell a vehicle privately, you can expect to spend a considerable amount of energy on everything from taking pictures to meeting potential buyers and screening offers. Even though it will help you sell your car for more than you would if you traded it in, remember that your time is valuable. Once you take into account the hours spent orchestrating a private-party sale, the financial gain may not be worth it.

3. Safety Concerns May Be Present

Putting yourself in a vulnerable position, you'll be dealing with a stranger in a private-party sale. If your meeting is held in a public space, for instance, you can minimize your safety risk. It will be challenging for you to navigate certain specifics of the car-selling process.

A prospective buyer has the right to test drive the car. Being in the vehicle during this process places you in a vulnerable position. However, if you're not inside the vehicle, someone can easily drive off with it if you're not there.

Your vehicle may also be subject to fraudulent payment. Escrow services can provide you with some protection, but be aware that scammers are capable of creating fake escrow companies.

You may share personal details with the person you are transferring titles to intending to pass along service information. This could make you a target of identity theft. If you are handing off your service records to a buyer, you should use a marker to obscure any personal information like credit card numbers and phone numbers.

Donating Vs Selling: Pro's & Con's in Selling

Pro's Of Donating Your Car

1. Feels Good

Car donations provide a great deal of satisfaction and can't be overstated. The satisfaction of helping other people cannot be overstated.

As well, the cycle of giving and receiving continues. As a thank-you for your kindness to others, you may just increase your karmic chances of receiving a good Samaritan's help in the future if you need that kind of assistance.

2. Helps A Worthy Cause

Many charities are working hard to make the world a better place, and they're all doing their part. You may be passionate about supporting animals, the environment, or the needy, but donating your car will further your cause.

3. Tax Benefits May Apply

When tax season comes around, you may be able to save money by donating your car. The IRS, however, does not recognize donations made to all charities. To reduce your tax burden, your donation must be made to an organization that has been approved by the IRS as eligible for tax-deductible contributions. There is a tool on the IRS site that allows you to look up the status of charities of your choice.

4. The Process Is Simple

If you wish to donate a car for cash simply to get it off your hands and provide assistance to a charity, then the process couldn't be simpler. Your car will be picked up at your doorstep once the charity is notified of your intentions.

The process of donating your old car is much more complicated if you'd like to receive optimum tax benefits through your donation, which brings us to the cons of donating it.

Con's Of Donating Your Car

1. It May Not Be Worth The Effort To Deduct Your Donation From Your Taxes

It is possible to claim the full market value of your vehicle when donating your car, but stringent requirements make this an extremely rare occurrence. A charitable deduction in this area is typically limited to what the charity received for selling the vehicle or salvaging it, usually substantially less than the vehicle's market value.

If the charity sells several cars at the same time, the organization will receive a flat fee for each car.
According to the IRS site, you can claim fair market value only if the following conditions apply:

Your car is put to "significant intervening use" by the charity. The charity might use the car, for example, to deliver meals to the poor.

If your vehicle is "materially improved" by the charity. The term refers to major repairs that affect the value of your car in a major way, rather than minor upgrades.

A charity that gives or sells a vehicle to a needy individual at a substantial discount from the market price is deemed to be providing direct assistance to indigent individuals in dire need of transportation.

Donating Vs Selling: Pro's & Con's in Donating

2. Gaining Tax Benefits Can Take A Lot Of Time And Effort

If you're used to submitting your tax returns using a 1040EZ, you'll need to change that practice if you're donating your car. As a result, the tax-preparation process will be more complex if your car donation is used to reduce your tax burden.

When dealing with tax paperwork for a car donation, you need to be aware you probably will not get immediate results. According to our previous discussion, you'll most likely need to claim the value at which the charity has sold your car. Thus, you will need to wait for the sale to occur, which could be weeks or months away. You will receive a receipt from the charity detailing the price of the sale after the sale has occurred.

For a six-month tax extension, you can delay your return until the car's sale price has been received from the charity, which will give you time to include the sale price on your tax return. The second option is to file the return on time, but do not claim the deduction. If you receive the car's sales price, you can amend your return with the deduction.

3. Claiming Tax Benefits From The Donation May Result In An Audit

Keep receipts for a few years after your return is filed if you are deducting your car donation on your taxes. When it audits tax returns, the IRS looks at the last three years and will go as far back as six years if a "substantial error" is found.

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Donating Vs Selling Your Old Cars (What To Consider Before You Decide)

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As a result of this high number of sell-offs, many people are left wondering if they should sell their old car or donate it instead. If you're one of these individuals and want to make an educated decision before selling your car or donating it, read on for some helpful advice!