Donating an old couch or a working refrigerator can save you hundreds of dollars in taxes, but establishing its current value can be a tricky proposition.
DEAR MR. MYERS: We want to donate some of our old furniture to charity before the end of this year so we can deduct the donation on our upcoming tax return. But how do we know how much the furniture is worth? We want to deduct as much as possible, but we don’t want to get in trouble with the IRS.
ANSWER: For a donation to be tax-deductible, the Internal Revenue Service says, any furniture, appliances or other items you give to charity must be in new or at least good condition. That means that you can deduct part of the cost of, say, a well-maintained sofa that’s three years old but cannot claim a write-off for a beat-up couch or broken lamp that would otherwise wind up in the trash.
It’s also important to note that most household items you donate can’t be deducted for their original purchase price. Unless it’s something like a priceless Rembrandt, or a rare tea set that has soared in value since you bought or inherited it, you’re not going to get a 100 percent write-off that matches what you initially paid.
The venerable Goodwill Industries, which resells donated goods to help nearly 10 million people each year with job training or other assistance, offers a free “donation value guide” on the Internet that provides an estimate of virtually every type of household item that you may choose to give to charity and then take an appropriate deduction.
Visit the website at goodwilll.org, or ask a volunteer for help if you choose to bring the item to one of its 2,500 stores for a valuation.
You also might want to get a free copy of IRS Publication No. 551, Basis of Assets, by calling the agency at 800-829-3676 or by downloading it from irs.gov.
REAL ESTATE TRIVIA: Homeowners and renters who live in Utah are considered the most charitable in the U.S., a survey by Internet giant wallethub.com says, based largely on the percentage of their annual income that they give away and the number of hours that they volunteer. South Dakotans ranked second, with a two-way tie between Idaho and Kansas for third.
DEAR MR. MYERS: You recently wrote about some unusual ways to save money on energy bills. That was a good column, but you forgot to mention one more important energy-saver — solar pool covers, like the one we paid about $150 to purchase. It cut our pool-heating bills by about $20 a month, so it paid for itself in less than a year!
ANSWER: You are right. I should have suggested money-saving solar pool covers for the folks who are lucky enough to live in “warm weather” states where pools can be used almost 365 days a year, such as Florida, California, Arizona, plus many other Southern and Southwestern states.
The heat generated by a solar pool cover pushes the hot air downward, which keeps the water warm with little or no need for gas or electricity. The U.S. Department of Energy says that a good cover can slash a pool’s heating costs by 50 percent or more.
As a bonus, a cover also helps to limit evaporation — which saves on water bills, too — and even makes the chlorine and other pool chemicals last longer.
DEAR MR. MYERS: We signed a purchase contract for a home, and we followed your advice by making our offer contingent upon getting a satisfactory report from a home inspector. The inspection report says that the home has some serious problems with the roof that could cost about $5,000 to repair. Is the seller required to pay for the work because our offer was contingent on an inspection?
ANSWER: No, the seller isn’t obligated to make the repairs in order to close the sale.
You were certainly wise to make the purchase of the home contingent on your first obtaining a satisfactory report from a professional inspector. A typical inspection contingency allows buyers to cancel a sale and get their deposit back if the report uncovers previously undetected problems, such as a badly leaking roof or a plumbing system that needs a complete overhaul.
An inspection contingency does not, however, require the seller to fix any problems that the inspector may find.
When an inspection uncovers major problems, buyers like you have four basic options: Renegotiate with the seller to have the needed repairs made before the sale closes; ask for a lower sales price to make the repairs after moving in; purchase the property “as is” or simply cancel the sale and have their deposit returned.
If you still want the house, contact two or three licensed roofers and ask for written estimates for the cost of the work that needs to be done. The written bids might be enough to persuade the seller to pay for some or all of the needed work.
David W. Myers’ column is distributed by Cowles Syndicate Inc.