Figuring out the fair market value of a car you want to donate can be tricky, but it's not impossible. Fair market value is a measure of the amount an object could sell for on the open market. This could mean its value at a dealership, an auction, or in a private sale. Fair market value takes into account the amount of wear and tear on a vehicle, and the likely purpose that the vehicle will be used for. For example, a car that could only be sold to a junkyard would have a fair market value of the scrap value of its parts.
As anyone who has ever tried to sell a vehicle knows, figuring out how much a car is worth can be difficult. If you go to ten different sources, odds are you will get ten different prices. Because of this, most accountants advise their clients to get several quotes for an item such as a vehicle, then average these quotes together in order to come up with the fair market value of the vehicle.
Fortunately, you don't have to spend a lot of time looking for these quotes. Start by using a website to determine the Blue Book value of your vehicle. There are several websites that provide this service for free, if you can enter some information about the vehicle. If should be noted that these websites tend to deal only with the most popular brands of cars sold in America. If you have a vehicle that is more than 20 years old or is a rare vehicle, getting an idea of its fair market value will be a lot more complicated.
The next thing that you'll need to do is get an idea of the condition of the vehicle. One of the biggest factors determining the value of a vehicle is its mechanical condition. Taking the car to a certified mechanic can give you an idea of its condition, including any repairs that need to be made. The mechanic should also be able to give you an idea of whether or not it would be cost effective to repair the vehicle.
Keep in mind that the fair market value is how much the car could sell for. That means that even if you're giving it to a charity that will fix the car, it's still only worth how much the vehicle would sell for in the condition that you donate it. The added value of repairs done by someone else cannot be counted.
