The IRS requirements for an appraisal for a donation depend on the value of the donated property and the type of property. Here’s a breakdown:
Generally:
- No appraisal needed for < $250: Contributions less than $250 don’t require a formal appraisal, but you should keep a receipt or other documentation showing the value and date of the donation.
- Written acknowledgment for $250+: For contributions of $250 or more, you need a written acknowledgment from the charity stating the amount and nature of the donation. This doesn’t need to be an appraisal, but it should describe the item and include a good-faith estimate of its value.
Formal appraisal required:
- > $5,000 non-cash: If you’re claiming a deduction for non-cash property (excluding publicly traded securities) valued at more than $5,000, you need a qualified appraisal. This applies to items like cars, artwork, antiques, furniture, and jewelry.
- Per IRS form 8283, art valued at $20,000 or more. If your deduction for art is $20,000 or more, you must attach a complete copy of the signed appraisal to your return. For individual objects valued at $20,000 or more, a photograph must be provided upon request. The photograph must be of sufficient quality and size (preferably an 8 x 10 inch color photograph) or a high-resolution digital image to fully show the object.
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Deduction of more than $500,000. If you are claiming a deduction of more than $500,000 for an item (or group of similar items) donated to one or more donees, you must attach the qualified appraisal of the property to your return unless an exception applies. See Exceptions, earlier.
Qualified appraisal requirements:
- Prepared by a qualified appraiser: The appraisal must be done by a qualified appraiser who is independent of the donor and the charity. Look for someone certified by a professional organization like the Appraisal Institute or the American Society of Appraisers.
- Compliance with relevant standards: The appraisal must follow the Uniform Standards of Professional Appraisal Practice (USPAP) as well as IRS regulations. It should include details like:
- Description of the property
- Valuation methodology used (e.g., comparable sales, income approach)
- Market analysis and justification for the valuation
- Appraiser’s qualifications and credentials
- Date of valuation (within 60 days of donation)
Where to find resources:
- IRS Publication 561: This provides detailed information on valuing all types of donated property.
- IRS Form 8283: Use this form to report non-cash charitable contributions over $5,000, and attach your qualified appraisal.
- IRS website: Find more information and helpful resources on charitable contributions on the IRS website. Click Here for the form 8283 instructions.
Remember:
- Always keep your appraisal and other documentation for your records.
- Consult with a tax advisor if you have any questions about specific scenarios or the tax implications of your donation.
- This is not a complete set of requirements. Consult the IRS or your legal advisor for complete requirements.
Find out how Collectorpro software can help you comply with USPAP and IRS Guidelines at https://collectorpro.com.
