Charitable Contribution Appraisals

"What you need to know.....about the term Fair Market Value and IRS Form 8283.”

Fair Market Value is defined by the Internal Revenue Service for donation purposes as “the price at which property would change hands between a willing buyer and a willing selller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of revelant facts.” Notice that the above definition states “the price at which property WOULD change hands”. Fair Market Value is a hypothetical value used in appraisals for property that is not sold but changes ownership by transfer of property through inheritance or donation to charity.

Because the item has not actually sold, a hypothetical value must be placed upon the item that is being donated in order for a tax deduction to be taken by the donor. If the item or items you have donated during the year total $500.00 you must fill out IRS Form 8283.

Items totaling over $500. which are depreciating household items or used clothing in poor condition and are being claimed for a deduction must now have an appraisal. In addition, appraisers must include a paragraph in their appraisal report about their qualifications and knowledge of requirements and penalties. This is according to the Federal Functions /Pension Protection Act of 2006.

For art and antique donations that total from $500. to $5,000., you must complete Section A on your Form 8283 and include this form as part of your tax return.

If your donated items total over $5,000., you will need to complete Section B which is for items or groups of similar items whose Fair Market Value has been established at $5,000. or more. You must have an appraisal by a qualified appraiser conducted, but it does not need to be attached to the tax return. You keep the appraisal with your supporting tax documents. The appraiser must sign Form 8283, as well as the representative of the charitable organization (donee) to which the item has been donated.

For Fair Market Value donations of a item or similar items that total $20,000. or more in value you must attach a copy of the appraisal report to Form 8283 and your tax return. Items in this value range are usually valuable works of art, appreciating antiques, or expensive cars and boats. Occasionally, we have conducted appraisals of an entire estate that has been donated, in which case the total has been over $20,000.

Bosch Appraisal and Estate Services does not offer tax advice. We recommend that you always refer to your CPA or tax accountant to determine your exact appraisal needs whenever you are donating over $500.00 to charity in any given year. Be certain to keep all receipts in order to support the value you take as a write off.