Why You Need an Appraisal Before You Donate Property

If you wish to donate noncash property valued at more than $5,000 to a charitable organization, you’ll generally have to obtain a qualified appraisal that meets IRS guidelines. An appraiser typically will use an item’s fair market value (FMV) as the basis for valuation. FMV is the price the property would sell for on the open market has given a willing buyer and a willing seller, no compulsion to buy or sell, and a reasonable knowledge of the relevant facts.

You’ll be responsible for providing the IRS with information that supports your right to deduct the charitable contribution. In most cases, this will be an “appraisal summary” on an IRS form attached to your tax return. You’ll have to attach a copy of the appraisal for gifts of art valued at $20,000 or more and for all gifts of property valued at more than $500,000, not including inventory, publicly traded stock, and intellectual property.

If you make gifts of two or more items in the same tax year — whether to one or multiple donees — the values of all property in the same category should be added together to determine if the $5,000 limit is exceeded.

The appraisal must be received before your income-tax return is due. It must be signed, dated, and made no earlier than 60 days before you donate the appraised property.

Qualified Appraisal Requirement: The Exceptions

Certain contributions don’t require a qualified appraisal. These include:

A car, boat, or airplane for which the deduction is limited to the charity’s gross proceeds on the property’s sale

Stock in trade, inventory, or property held primarily for sale to customers in the regular course of business

Publicly traded securities for which market quotations are readily available

The qualified intellectual property, such as a patent

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

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