A Guide to Determining the Value of Non-Cash Charitable Donations
Your non-cash property donations to charity are just as deductible as your cash donations. However, unlike your cash donations, you must assess the fair market value of each property donation you make since that value is the amount you can deduct. Various valuation methods exist for different types of property.
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Valuing Vehicle Donations
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Donating a used car can provide you with a large charitable deduction, but it involves some due diligence on your part. You must first estimate the value of the car using a reputable price guide, but only referencing private-party rather than dealer prices. The price guide must report the values for the same make, model and year of car in various conditions since the IRS requires that you factor the car’s mileage, body and operating condition into the value. You must then wait for the charity to send you a 1098-C form that reports the price for which it sells your car. If this price is less than the value you estimate, you can only deduct the amount on the 1098-C. If, however, the charity makes improvements to the vehicle prior to the sale or offers it at a discount to a needy individual, you can claim a deduction equal to the fair market value you estimate.
Used Household Items
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Doing some spring cleaning can actually save you some money in taxes if you donate your household items to a charity instead of throwing them into the trash. When you donate items such as used clothing, furniture or appliances, each item you donate must be given some value so you can claim the deduction. An item will have value if another person can make use of it without significant repair. For example, if you donate clothing, it must be free of excessive wear and tear; otherwise, it has no value. The best way to value your clothing, as well as your furniture and appliances, is to investigate what other thrift stores in your area charge for similar items in comparable condition.
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Items Requiring Appraisals
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When you donate items that are rare or for which there is only a niche market, it may be necessary to consult a professional appraiser to estimate their value. For example, if you donate a painting that has value, you should obtain a written appraisal for it from an art dealer. Donating autographed sports memorabilia presents the same valuation problems since there are a range of factors that affect their price.
Food Donations
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Your charitable food donations are one of the few types of property for which the IRS doesn’t require you to estimate fair market value. Instead, you can claim a deduction for your actual cost of purchasing the food, provided it’s edible at the time you make the donation.
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