Luxury cars are not usually considered items for charitable donation. However, many wealthy individuals with large disposable incomes often have excessive luxury items that are used infrequently. Donating a vehicle can be a philanthropic and generous gesture that will benefit both the giver and the receiver.
Luxury vehicles are known for their superior comfort, reliability, smooth drive and expensive price tags. If the vehicle is rarely driven, the owner must still incur the expense of maintaining a vehicle that will just sit around in a garage or driveway for a significant period of time. Luxury vehicles typically possess price tags of $50,000 or more. If the vehicle were auctioned or sold, a person in need could benefit very much.
For example, selling the vehicle may yield 50 percent or more of the vehicle's value. These proceeds could fund a down payment on a house for a needy person, or help cover a person's medical bills. The donor will receive tax benefits and feel good about helping a person in need. The charity, in turn, may provide the donor with a free vacation or gasoline vouchers in appreciation of their donation.
To donate, many organizations may auction the vehicle for cash. The cash will then be used to help an individual or organization in need. The organization must possess a 501(c)(3) status in order for the donor to qualify for tax benefits. The donor cannot just give the car to an individual and receive tax benefits, in most instances.
Most charitable organizations must sell the car before the donor receives a sales receipt stating the amount of the car donation tax write-off. This document should be attached to your tax return as supporting documentation. Donors must wait until the sale occurs, and usually within 30 days after they will receive documentation from the charitable organization.