Qualified Appraisal

Qualified Appraisal: IRS Rules, When It’s Needed, and Why It Matters

What is a qualified appraisal?

A qualified appraisal is a written valuation of donated property that meets Internal Revenue Service (IRS) standards and is prepared by a qualified appraiser. It establishes the fair market value of property for tax-deduction purposes and helps substantiate non-cash charitable contributions.

Qualified appraisals:
* Must be prepared no earlier than 60 days before the donation.
* Are used when a taxpayer claims a deduction for donated property that exceeds certain IRS thresholds.
* Help prevent incorrect deductions and reduce the risk of IRS challenge.

Who is a qualified appraiser?

A qualified appraiser is someone with demonstrated competence in valuing the specific type of property being donated. The IRS recognizes an appraiser as qualified when they meet one or more of the following:

• Hold an appraisal designation from a recognized professional organization.
• Have state licensing or certification (when applicable).
• Have completed relevant college and professional coursework.
• Have at least two years of experience buying, selling, or valuing the same type of property.

The appraiser must be able to support the methodology and assumptions used in the valuation.

When is a qualified appraisal required?

A qualified appraisal is required in situations where the claimed tax deduction for donated property exceeds IRS thresholds:

• Form 8283 must be filed to report non-cash charitable contributions if the total deduction for all non-cash gifts is more than $500.
• A qualified appraisal is generally required and attached to the donor’s tax return when the deduction for a single item (or a group of similar items) exceeds $5,000.

Timing: the appraisal must be prepared no earlier than 60 days before the donation date and should be obtained in time to complete and file Form 8283, if applicable.

Using Form 8283

Form 8283, Noncash Charitable Contributions, is used to report non-cash gifts and has two sections:

• Section A — For donations with a deduction claim of $5,000 or less and for publicly traded securities. (Publicly traded securities have daily published quotations or are mutual fund shares.)
• Section B — For donations where the deduction for an item or a group of similar items exceeds $5,000. Section B requires more detailed information and typically must include the qualified appraisal.

Ensure the appraisal and Form 8283 are completed accurately and retained with tax records.

Why accurate appraisals matter

• Correct valuation determines the allowable tax deduction.
• Overstated values can trigger IRS scrutiny, audits, or disallowance of deductions.
• Undervaluing property can result in a smaller tax benefit than deserved.

Practical steps for donors

1. Determine whether your non-cash gift requires Form 8283 and a qualified appraisal.
2. Engage an appraiser who meets IRS qualifications and who specializes in the type of property you are donating.
3. Obtain the appraisal within the IRS timeframe (not earlier than 60 days before donation).
4. Complete Form 8283 (Section A or B as applicable) and attach the appraisal when filing your return.
5. Keep copies of the appraisal and related documentation with your tax records.

Key takeaways

• A qualified appraisal documents fair market value for donated property and must meet IRS standards.
• Qualified appraisers have specific education, experience, or professional designations and often hold state licenses.
• Form 8283 is required for non-cash contributions exceeding $500; a qualified appraisal is typically required for single items or similar groups valued over $5,000.
• Accurate appraisals protect donors from IRS challenges and ensure correct deduction amounts.