What Is a Qualified Appraisal?
A qualified appraisal is an appraisal document that aligns with the standards set by the Internal Revenue Service (IRS) and is performed by a qualified appraiser. These appraisals are essential when property is donated, and they must be completed no more than 60 days before the donation.
How a Qualified Appraisal Works
A qualified appraisal is a specific type of appraisal that adheres to IRS appraisal standards. To ensure accurate valuation when making a donation, the appraisal must be carried out by a qualified appraiser. Incorrect valuations could either result in a lower deduction or raise suspicion with the IRS if the value appears inflated.
A qualified appraiser is someone who has earned an appraisal designation from a recognized professional appraisal organization. This designation is based on demonstrated competence in valuing the type of property being appraised.
Additionally, an individual can achieve the status of a qualified appraiser by meeting the minimum education and experience requirements laid out by the IRS. One way to meet these requirements is by becoming licensed or certified in the state where the appraised property is located.
A qualified appraiser typically has completed college-level and professional-level courses and accrued at least two years of experience in buying, selling, or valuing similar properties.
Importance of Form 8283
A qualified appraisal must be documented to inform the IRS that the property’s value exceeds $5,000. This appraisal needs to be included with Form 8283 when filing a tax return for deduction eligibility. Form 8283 is mandatory for reporting non-cash charitable contributions, particularly if the total deduction for all non-cash gifts surpasses $500.
Form 8283 comprises two sections, and the section to be filled out depends on the type of donated property and the claimed deduction amount:
- Section A: Used for reporting donations of property where the claimed deduction is $5,000 or less, as well as publicly traded securities. Publicly traded securities include those with daily published quotations listed on an exchange and mutual fund shares.
- Section B: Intended for reporting property donations where the claimed deduction exceeds $5,000 per item or a group of similar items.
Related Terms: appraisal, IRS standards, property valuation, charitable contribution deduction
References
- Internal Revenue Service. “Publication 561, Determining the Value of Donated Property”, Page 9.
- Internal Revenue Service. “Publication 561, Determining the Value of Donated Property”, Pages 10-11.
- Internal Revenue Service. “Instructions for Form 8283: Noncash Charitable Contributions”, Page 1.
- Internal Revenue Service. “Form 8283: Noncash Charitable Contributions”, Pages 1-2.
- Internal Revenue Service. “Instructions for Form 8283, Noncash Charitable Contributions”, Page 1.
