How To Reduce Fair Market Value

These are the four IRS rules under which you can get the maximum deduction (the fair market value) of a donated car:

1. At the point when a charity bargain our car for $700 or less, we can claim either the fair market value or $700, whichever is less.

2. When the charity intends to make a "significant intervening use of the vehicle." This means the charity will use the car in its work, such as delivering meals to needy people.

3. When the charity intends to make a "material improvement" to the vehicle, which is "anything that increases the car's value and prolongs its life," Midwood says. "It can't be a minor repair or maintenance; it must be something like fixing the engine or systems that run the car," she says.

4. When the charity gives or sells the vehicle to a needy individual at a price significantly below fair market value, and the gift or sale is part of the charity's mission of helping the needy who need transportation.