If Santa left you a shiny new bike under the tree this year, or if you’re taking advantage of some of the great sales going on right now, you may want to think about the benefits of donating your old motorcycle to charity.
Benefits of donating your cycle:
- Your donation can be tax deductible if you itemize your deductions.
- No need to invest time and money advertising the sale of your cycle.
- Quick and simple way to get the cycle out of the garage. Often, the charity even picks it up.
- Great way to sell a cycle that needs mechanical work. Some charitable organizations can sell the cycle for parts or repair it for a higher resale value.
- An opportunity to give back to a good cause – especially during the holiday season.
But donation may not be right for everyone. If your primary reason for wanting to donate your bike is to get the most money you can, donation may not be your answer. Tax laws changed a while ago, so you must deduct the “fair market value” as opposed to the “retail suggested price.” Fair market value, according to the IRS, is the price which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.” A good resource to determine fair market value is Kelly Blue Book.
Maximize your tax benefit
To receive the maximum tax benefit, make sure you choose a charitable organization where the cycle will be used “in direct furtherance of the organization’s charitable purpose.” The organization should use the vehicle for its business itself or donate it to those in need. That way you can deduct the full market value of your vehicle.
You also need to make sure the charitable organization is one that the IRS qualifies to receive tax deductible contributions, such as churches, government agencies, nonprofit schools and hospitals, as well as organizations such as the Salvation Army or Red Cross.
Where to donate your motorcycle
Before you choose an organization, make sure they service your area. Most of them will pick up your vehicle right at your house – whether it’s running or not. Check to see if there is a cost to tow it or if that will be deducted from your value; most of the time it’s free.
Check with your local tax professional for details and which tax forms the government requires. The charitable organization that you are donating to can oftentimes answer a lot of your tax questions too.
Preparing your cycle for donation
Clean your motorcycle and put it in the best working condition you can. Have the title readily accessible as you will need that signed before transferring it to the charity. Have all sets of keys together and remove the license plate. Make sure you have the correct paperwork completed that the organization requests.
If you want to take advantage of the tax benefits before the end of the year, donate your motorcycle by December 31. The motorcycle does not need to be picked up by December 31, you just need to have the charity’s forms completed by then. And don’t forget, if you need a professional appraisal to follow those deadlines.
Not enough time to claim the donation in by the end of the year? Start the process now and reap the tax benefits in the next year!