Tax deduction through Vehicle donation
The second head under which tax deduction is available is vehicle donation. The rules for this are slightly more complicated. The exact tax break depends on the donor’s claimed value of the gift and how the charity uses the vehicle. Thus you may not know the size of your deduction when you make the donation. In addition, there is a $500 limit on the donated vehicle s value, beyond which the rules get even more complex. A donor also gets a fair market value deduction if the charitable organization conducts major repairs that significantly increase the value of the donated vehicle.
It is therefore better to sell the vehicle and get cash in hand than get a relatively small tax deduction. An automobile should be donated when you don t wish to spend money on souping it up, and, of course, if you re in a generous mood!
