With Christmas right around the corner, everyone is sharpening their pencils and jotting down their best Christmas wish ideas. And while mobile devices and apparel items are always a big hit around Christmas, maybe it’s time to go big this year. Maybe it’s time to ask for something bigger — like a car! Or perhaps you’re on the other side of the fence and you want to give big. If this is you and you’re in the mood to impress, then this is the year to ‘wow’ your loved one with a super expensive present, like a vehicle. Let’s look at the pros and cons of gifting a car for a loved one this holiday.
Pros of Gifting a Car to a Loved One
Spreading Holiday Cheer
There really is no better way to spread holiday cheer than by gifting a car. When you gift your loved one a vehicle, you are showing just how unselfish you are and how you believe in extending a helping hand and making someone else’s life better. Having a car may be the difference for your loved one in being able to hold a steady job or having to file unemployment.
It also may be the difference between being able to get back and forth to important medical appointments. When you gift them a car, you are benefiting their life in so many ways, some of which you may never even be aware of. If your loved one doesn’t have a license, they can always take a Comedy defensive driving course and follow the appropriate steps to get licensure.
Add a Little Cash to your Wallet
Gifting a car to your loved one means that you will be taking the car out of your name and putting it in their name. In doing this, you won’t have to pay any more taxes on it or pay to have its registration updated each year. You’ll be saving money and putting a little cash back into your wallet.
You can Claim a Tax-Deduction
When you gift your loved one a car through a charity organization, you can take advantage of a tax deduction. And while tax deductions for this type of gift used to be based on the fair market value of the car, this isn’t so anymore. Instead, there are many factors used to determine how much you can claim.
A Closer Look at Gifting a Car through a Charity
Before we talk about the cons of gifting a car to your loved one, let’s take a close look at how gifting a car through charity works in regards to tax deductions. When you gift a car through a charity, the car will be sold or given away for free to someone in need, such as your loved one. If the car is sold, you will only be able to claim the amount it sold for on your taxes. If, however, the car is used for non-profit purposes in between you donating it and it being auctioned, then the full fair market value amount of the car can be deducted from your taxes.
Cons of Gifting a Car to Your Loved One
Lots of Paperwork
If you are going to gift your car through a charity to your loved one, which definitely has its advantages, you are still going to have to fill out lots of paperwork. You may think you can just pull up to the charity organization and throw them the keys, but this isn’t the case. Tedious and daunting paperwork is going to be a part of gifting your vehicle. In fact, you will be responsible for transferring the title and providing any requested documentation.
Lose Out on Money
When you gift a car, you are literally giving it away for free. Yes, you may benefit financially from a tax deduction standpoint, but most times, the tax benefit is not going to be more than what you could make if you sold the car for cash. This is why it is so important for you to assess your goals in gifting the car. If you want to make money and help out your loved one, you should consider selling the car to them at a reduced price. If, however, you are not concerned with making money and you are genuinely looking to extend a helping hand with nothing expected in return, then gifting the car is going to be an excellent option.
Christmas is a perfect time of year to help those in need. If you have a loved one who could benefit from having a car, you should consider the pros and cons of gifting one to them. If your loved one has a poor driving record, they can always take part in a point reduction course to help lower their insurance premiums.