First of all, no, it doesn't work like that. Second of all, even if it did, it would likely cost you money, not save you money.

Until a few years ago, you used to be able to deduct the fair market value of a Car Donation New York . Then Congress changed the rules to eliminate a lot of the fraud that was taking place. Now, unless the charity you donate the car to intends to keep the car and use it for its charitable purpose (in which case you can still deduct the FMV), you can only deduct the amount the charity actually sells the car for (they have to provide you with a statement telling you this amount after they sell it). So, in the latter case, they obviously aren't going to sell the car that you bought for $500 for $1000 -- unless you got some amazing deal when you bought it. Since they will probably sell it at a wholesale auction, you'll be lucky if they get $300 for it, which is all you could deduct. On the other hand, even if the charity intends to keep and use your donated car, you can only deduct the FMV. What is the FMV? It is the price a buyer would be willing to pay for the car on the open market. If you just bought the car for $500, that is a pretty good indication that the FMV is $500. And that would be your donation.