Donated Property Deductions Require Professional Appraisers

Individuals, partnerships, and corporations are all eligible to receive tax deductions for making charitable contributions to qualified organizations. However, the IRS has very specific requirements when a donation happens to be of appreciated property, other than publicly traded securities. While you are allowed to deduct the fair market value (FMV) of the property on your 2014 tax return, in certain circumstances if the deduction will be in excess of $5,000 your return must be accompanied by the qualified appraisal.

In such cases, your best estimate of the property’s value will not be considered adequate, so you will have to employ the services of a certified, professional appraiser, defined by the IRS as follows:

1)     The appraiser meets the Treasury Department’s standards for experience and education, and/or has received certification from a legitimate professional group.

2)     The appraiser regularly does appraisal work for monetary compensation, and has not been barred from practice by the IRS within three years prior to the current appraisal.

3)     The appraiser has specific experience in evaluating the type of donated property being appraised.

4)     The appraiser agrees to comply with any additional tax regulations that may arise related to the property being appraised.

The IRS requires that any appraiser hired declare that (a) they meet the qualifications above, and (b) that they understand the potential for civil penalties if their appraisal is deemed inadequate. You may also face tax penalties for excessive valuation, so practice due diligence before hiring your appraiser.

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