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What Is a Qualified Appraisal?
Let me explain what a qualified appraisal really is. It's an appraisal that fully meets the requirements laid out by the Internal Revenue Service (IRS) and is carried out by a qualified appraiser. You need to know that these appraisals are done no earlier than 60 days before you donate a piece of property.
How a Qualified Appraisal Works
When I talk about a qualified appraisal, I'm referring to a document that complies with IRS appraisal standards. You have to get this done by a qualified appraiser. This is crucial when you're donating property because getting the value wrong can mean you claim a deduction that's too low or trigger an IRS review if it seems inflated.
A qualified appraiser is someone who's earned a designation from a recognized professional organization, based on their proven ability to value the specific type of property involved. Alternatively, you can qualify by meeting the IRS's minimum education and experience standards, such as getting licensed or certified in the state where the property is located.
To be precise, a qualified appraiser has completed college and professional coursework and gained at least two years of experience in buying, selling, or valuing similar property.
Form 8283
You use a qualified appraisal document to inform the IRS when a property's value exceeds $5,000, and you attach it to Form 8283 with your tax return if you're claiming a deduction. Form 8283 reports non-cash charitable contributions and is required if your total non-cash deductions go over $500. This applies to individuals, partnerships, and corporations alike.
Form 8283 has two sections, and which one you fill out depends on the property type and deduction amount. Section A covers donations where you claim $5,000 or less per item, as well as publicly traded securities like those listed on exchanges or mutual fund shares with daily quotations. Section B is for donations exceeding $5,000 per item or group of similar items.
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