What You Need to Know About Appraisals for Charitable Donation Deductions

When donating to charity, many people are curious about the potential tax benefits that are involved in the process. According to the IRS, “if you donate property other than cash to a qualified organization, you may deduct the fair market value of the property.” In this same vein, the IRS also requires that a donor who claims a charitable deduction of $5,000 or more for non-cash donations of personal or real property must obtain a qualified appraisal of the items' combined value.

Will the IRS Accept the Appraisal?

An appraisal must be "qualified" to satisfy the IRS. A qualified appraisal is one that:

• Made within 60 days of the donation
• Received by the donor before the due date of the return on which the deduction is claimed
• Reflects the Fair Market Value (FMV) of the donated property
• Involves an hourly or flat appraisal fee. Appraisals with a fee that is a factor of the appraised value is not accepted due to clear conflicts of interest.
• Conducted in accordance with generally accepted appraisal standards and IRS rules
• Prepared, signed, and dated by a "qualified appraiser" (credentialed by a nationally-recognized appraisal association)

Who Gets the Appraisal?

The appraisal must be arranged for and paid for by the donor—the nonprofit cannot help pay for it in any way. Moreover, the donor can't deduct appraisal fees as part of the charitable contribution.

Do I Really Need an Appraisal?

Yes, if you wish to claim a deduction over $5,000. According to the IRS “A taxpayer may not claim a charitable deduction for a noncash contribution of over $5,000 unless the taxpayer obtains a qualified written appraisal of the donated property. Additionally, the taxpayer generally must attach an appraisal summary made in Section B of Form 8283, not the appraisal itself, to the income tax return on which the deduction is first claimed or reported. The appraisal summary must be signed and dated by the donee and the qualified appraiser who prepared it.”

Can I Claim a Deduction Without an Appraisal?

Without an appraisal report and appraisal summary from a qualified appraisal, a charitable donation deduction will not be accepted. In other words, proper documentation is necessary, even if the listed value (without an appraisal) is correct.

How Can I Begin the Appraisal Process?

AppraiseItNow is a global team of certified appraisal professionals. Our appraisers work in all 50 states, and are certified to appraise your personal property for charitable donation tax deductions.