Appraisals for Charity Deductions Over $5,000
When claiming a charitable deduction for noncash property valued at more than $5,000, specific IRS requirements must be met to substantiate the donation. These rules are designed to ensure accurate valuation and prevent abuse of the charitable contribution deduction.
Key Requirements for Donations Over $5,000
- Form 8283 Required: You must file Form 8283, Noncash Charitable Contributions, to report donations of property valued at more than $5,000 per item or group of similar items.
- Qualified Appraisal: For donations valued at more than $5,000, a qualified appraisal is required. This appraisal must be completed by a qualified appraiser and must include specific details about the property.
- Attachment for High-Value Art: If you claim a deduction of $20,000 or more for art or collectibles, you must attach the qualified appraisal to Form 8283. Additionally, a high-resolution photograph of the item may be required if requested by the IRS.
- Substantiation Documents: The IRS requires three types of documentation for noncash charitable contributions: a contemporaneous written acknowledgment (CWA), Form 8283, and in some cases, a qualified appraisal.
What Is a Qualified Appraisal?
A qualified appraisal is a detailed written document prepared by a qualified appraiser. It must include:
- A description of the property donated
- The date and place of the appraisal
- The appraiser’s name, address, and signature
- The appraiser’s qualifications and experience
- The method used to determine fair market value (FMV)
Important Notes
- Donations of publicly traded securities, certain intellectual property, or qualified vehicles may use Section A of Form 8283 without requiring an appraisal.
- The fair market value (FMV) of the property must be determined on the date of contribution.
- Failure to provide required documentation may result in disallowance of the deduction.
Source:
Publication 561 - Valuing Your Donation
Form 8283 - Noncash Charitable Contributions
Disclaimer: Always verify details with official IRS forms and instructions or consult with a tax professional. OLT (Online Taxes) provides guidance based on current IRS publications and forms.