Classic cars and collector's cars can be challenging to valuate.
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Classic cars and collector's cars can be challenging to valuate.
When donating a custom or collector car, the car donation tax law remains the same as far as the IRS is concerned: a donor may deduct up to the fair market value of the vehicle when the vehicle is kept and used by the charity. In the case of a collector's item, rather than a standard vehicle, fair market value may be somewhat harder to determine. Nevertheless, you need to ascertain the fair market value for the car, rather than just deducting the money you've put into it. The IRS defines fair market value as "...the price a willing buyer would pay and a willing seller would accept for the car, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts." Obviously, the market for collector's cars is smaller than for regular cars. There is a certain segment of the population that understands and appreciates the value of a car like yours, and might be willing to pay you what you think its worth. But others would not. So you need some legitimate way to document how you came up with the figure; it may make sense to use an appraiser. In any event, if you think the car is worth more than $5000, and want to take that amount or more as a deduction, a professional appraisal is needed. The appraiser has to sign off on your Form 8283, which is the form you submit with your tax return when you donate a car.
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