To Sell or to Donate? What to Consider When Getting Rid of Unwanted Items
April 28, 2016 | Home and Family
If your spring cleaning ritual left you with piles of clothes or other items you no longer use, you’ll have a decision to make: to sell or to donate?
“The right choice depends on what’s most important to you,” said Cindy Costello, a self-described rummage and eBay enthusiast who’s been buying and selling stuff for more than 30 years. “Are you trying to make money, or do you need a tax write-off? Do you have the time and desire to sell your unused items, or do you want them out of the house as soon as possible?”
To help you make the choice that’s right for you, consider the pros and cons of each of the most popular options:
A garage sale is a good option if you want to get rid of a lot of things at once.
Pros: You decide when to have the sale, how much to charge for each item and whether you’re willing to negotiate price with a potential buyer. Plus, the proceeds are not subject to tax, according to the IRS. If you sell items for less than the amount you originally paid, the sales are not reportable.
Cons: Garage sales are a lot of work. You’ll have to collect items for sale, price them, set up, advertise, place signs in the neighborhood and then hope Mother Nature cooperates—because if it’s raining or snowing, you’ll probably have less traffic. After all that effort, Costello says, you may earn just 10 to 20 cents on the dollar for items you sell unless they’re very rare or almost new. A yardsalesearch.com survey showed the vast majority of sellers make $300 or less during a sale.
Consignment stores are a good option if you have brand-name items that have value but you don’t want to spend the time to sell them yourself. “Designer purses are a good example, and they’re very much in demand these days,” said Costello. “If you’ve got a $300 purse, you might be able to get a hundred bucks for it from a higher-end consignment shop, depending on the condition.”
Pros: There is very little work on your end. All you need to do is deliver the item to the consignment store and answer a few questions or (potentially) sign a contract.
Cons: The consignment shop earns a commission on each sale. “If it sells in the first month, you may get 50 percent of the selling price,” said Costello. “If it sells in month two, you may only get 40 percent. And if it’s been there 60 days or more, they’ll probably ask you to either pick it up or give them permission to keep it.” If you do sell items via consignment, you may also need to pay tax on the proceeds if the sales price exceeds what you paid for the item.
Etsy and eBay are two of the most well-known online marketplaces and can be a good option if you are selling items that you’ve purchased elsewhere, owned personally or made yourself. Items bought and sold through these websites tend to be smaller in size because the buyer often pays for shipping.
Pros: With global reach and site visitors numbering in the millions, you can connect with a lot of potential buyers.
Cons: Posting the items for sale can be time consuming. “It can take a good 15 to 20 minutes to take pictures of the item, decide on a price, write up a description and post it to the website, so unless your item will net you $35 to $50, it may not be worth your time to post it,” said Costello. You may also be charged a listing fee, transaction fee or payment processing fee for each item sold. And proceeds may be subject to income tax.
Another popular online marketplace is Craigslist, a classified-ad website that allows buyers and sellers to connect in more than 700 cities worldwide.
Pros: Unlike eBay and Etsy, posting an item on Craigslist is free (with a few exceptions) and can be a good option if you want to sell something that’s big, such as a piano, because most potential buyers are local.
Cons: Transactions typically take place offline and in person, so you’ll want to take precautions when meeting with your buyer. Many local police departments now offer “safe zones” on police station property where buyers and sellers can make the hand-off safely.
Donating items to charity is a good option if you don’t want to bother selling your unused items or need to get rid of things in a hurry (taking your kids’ unused toys to a drop-off while they’re at soccer practice).
Pros: The fair market value of your donation may be tax deductible if the donation is made to a qualifying charity and you itemize deductions on your federal income taxes. The amount of tax you’ll save is based on your current income tax rate. If you’re in the 25 percent tax bracket and you donate an item valued at $100, your deduction will come to $25. If you’re in the 33 percent tax bracket, you’ll be able to deduct $33.
Cons: You’ll need to determine the fair market value of each item you donate, keep track of what you’ve donated and, depending on the value of the donation, complete additional forms when you file your federal taxes. To make record-keeping easier, organizations such as Goodwill offer guidelines for valuing commonly donated items and tracking your donations.
The choice that’s right for you boils down to this: What’s most important? Whether you’re driven by the desire to make money, reduce taxes or get rid of clutter quickly, selling or donating your unused items gives them new life. “My own personal mission is to recycle, repurpose and reuse,” said Costello. “So when you’ve saved something from the landfill and passed it along to someone who can use it, it makes you feel good.”