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Having trouble deciding whether you should donate a car or sell it? It's important to keep four things in mind when deciding if you are donating your car or selling it to whoever is willing to pay your asking price. These four things are: --What is the value of the car? --What charity could you donate your car to? --What tax bracket do you fall under? --How much is your time worth to you? In determining the value of your car, you need to consider what the "real value" is. Many people mistakenly believe that they will get whatever the Kelley Blue Book says is the expected value. That is not always the case. Other factors affect what you can expect to get. The value stated by the Kelley Blue Book (KBB) is a good starting point in estimating what to ask, but is often not a reasonable expectation. A more realistic estimate would be to cut the KBB estimate by 30%. Of course, it will be further cut by the tax liability based on your tax bracket. Depending on your tax bracket, you will have to cut your net profit by whatever percentage you fall under. If you are in the 25% tax bracket and you get an offer for $1000 for your car, just know that after you decrease it by the 25%, you will only have a net profit of $750. You need to take this in to account when determining the net profit. This may well affect your decision as to whether to donate or sell. And we haven't even got into factoring common expenses accrued when selling your car. Advertising isn't free. Let's say that you ran an ad in Auto Trader magazine for $50 and a local newspaper ad cost $30. Take $80 from that $750. You may also want your car professionally detailed and cleaned up. This means subtracting another $70 to have your car washed and detailed. You will need to get the care inspected by a mechanic to be sure it is running correctly. Also, you will want to repair body damage to ensure you are getting top dollar. Subtract $75 or mechanic fees for the inspection alone, and you not have a car that is only netting you $525. We are now down to $595 as the value for the car. There may still be other expenses to consider, such as body damage repairs or mechanical repairs that are necessary to be able to sell it. Then, you would be down to even less than that value. Let's look at the difference in profit potential for donating compared to selling. Most donated cars are sold at auction. The IRS says they must be sold at auction and in use shortly after you have given it away in order to take the full deduction. Your tax deduction will more than likely be $500 or the auction price. If you get only the $500 deduction, you will be netting just $25 less than all the trouble of selling it. Is it really worth it? Selling a car can be quite time consuming. You will have to deal with strangers and answer all their questions and concerns about the car. You may get phone calls at all hours, some being very inconvenient for you. Your time counts for something. What kind of time are you looking at to sell a car? Count on an hour and a half or so making signs and/or producing ads. Another one hour can be consumed in phone calls. Mechanic appointments may take two hours and may be inconvenient with work schedules. Cleaning and detailing may consume another half hour. You have easily just used up five hours before you ever get the car sold. You can expect to have to show the car five to ten times before you get a buyer. You will have to schedule the showings at the customers convenience, and sometimes will schedule an appointment to show the car and have them not show up. This can eat up the time, and add as much as three hours to the time required to sell your car. It is plain to see how at least eight hours are consumed in selling your car, with only $25 expected profit. Can you really afford it? If you donate the car, you just have to call someone to come tow it away to auction and you are done. You never have to think about it again until income tax time when you take that deduction. It is obvious that donating your car makes much more sense than selling it.
Article Source: http://www.ezine-directory.info
Pamella Neely writes about the ins and outs of donating a car.
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