Is a donated car's deduction based on its appraised value?
Usually not. When the charity sells the vehicle without significant use or improvement, the deduction is capped at the gross sale proceeds the charity reports, which often run well below retail guide values. If the car sells for $500 or less, the deduction is the lesser of its fair market value or $500.
When can a car donor deduct fair market value instead of the sale price?
In the exception cases: the charity makes significant intervening use of the vehicle in its programs, materially improves it, transfers it to a needy individual at a below-market price, or keeps it for program use. The charity's written acknowledgment must state which exception applies, and contemporaneous condition and mileage evidence supports the claimed value.
Does a vehicle donation over $5,000 require an appraisal?
Yes. A claimed deduction above $5,000 requires a written appraisal from an independent qualified appraiser, generally completed within 60 days before the donation and included with the return. Photos, repair records, and comparable private-party listings round out the substantiation file per IRS Publication 4303.
Can a donor claim the highest Kelley Blue Book value for a donated auto?
No. The IRS accepts at most the private-party price for a truly comparable vehicle: same make, model, year, condition, options, and area, adjusted downward for high mileage, damage, or excessive wear. Dealer retail listings are not an acceptable measure, and top-of-guide claims are a frequent audit trigger.