A qualified appraisal is a written valuation of donated property that meets Internal Revenue Service (IRS) standards and is performed by a qualified appraiser. Taxpayers who claim income tax deductions for noncash charitable contributions use qualified appraisals to substantiate the fair market value of donated property when the claimed deduction for an item (or group of similar items) exceeds $5,000. A qualified appraisal must generally be prepared no earlier than 60 days before the date of the donation.
Why it matters
Accurate valuation affects the size of the tax deduction and the risk of an IRS challenge. An improper valuation can result in a smaller deduction than entitled or trigger an audit if the claimed value appears inflated. For contributions that push a taxpayer’s total noncash deductions over $500, Form 8283 must be filed with the return.
Who is a qualified appraiser?
A qualified appraiser is someone the IRS recognizes as competent to value the type of property being appraised. Typical qualifications include
• A professional appraisal designation from a recognized appraisal organization, or
– State licensing or certification (where applicable), or
– Sufficient education and experience: successful completion of relevant college and professional-level coursework and at least two years of experience in the business of buying, selling, or valuing the type of property being appraised.
How a qualified appraisal works — what the IRS expects
– Timing: The appraisal must generally be obtained no earlier than 60 days before the contribution is made.
– Content: A qualified appraisal report should describe the property, state the appraisal methodology, provide the appraiser’s estimate of fair market value, and document the appraiser’s qualifications and experience. (See IRS Publication 561 for detailed report elements.)
– Use with Form 8283: If the claimed deduction for an item or group of similar items is more than $5,000, the taxpayer attaches the qualified appraisal to Form 8283 (Noncash Charitable Contributions) and files it with the tax return.
Form 8283 — overview
– Purpose: Form 8283 reports noncash charitable contributions and is required when total noncash deductions exceed $500 for the tax year.
– Sections:
• Section A: Used for items valued at $5,000 or less and for publicly traded securities (securities with daily published quotations, including mutual fund shares).
• Section B: Used to report items (or groups of similar items) with claimed deductions over $5,000. For these gifts, a qualified appraisal is generally required and is attached to the tax return.
Practical steps — for donors (step-by-step)
1. Identify and describe the donated property.
2. Decide whether you need a qualified appraisal:
• If the claimed deduction for the item (or group of similar items) exceeds $5,000, obtain a qualified appraisal.
• If total noncash deductions for the year exceed $500, be prepared to file Form 8283.
3. Select a qualified appraiser:
• Confirm the appraiser’s credentials, experience with the property type, and whether they meet IRS qualifications (designation, state license/certification, or equivalent education/experience).
4. Schedule the appraisal so the appraisal date is no earlier than 60 days before the donation and reflects the fair market value as of the date of contribution.
5. Obtain the written appraisal with required elements (description, valuation method, value conclusion, appraiser qualifications).
6. Complete Form 8283:
• Use Section B for items over $5,000 (attach the qualified appraisal).
• Use Section A for items of $5,000 or less and for publicly traded securities.
7. Attach the appraisal (if required) and file Form 8283 with your tax return.
8. Keep copies of the appraisal, Form 8283, acknowledgment from the charity, and any supporting documentation.
Practical steps — for appraisers (step-by-step)
1. Confirm you meet IRS criteria to be a qualified appraiser for the property type.
2. Inspect the property and gather all relevant data (condition, provenance for art, comparable sales, etc.).
3. Use appropriate valuation methodologies (comparable sales, income, cost approaches) and document the reasoning.
4. Prepare a written appraisal report that includes:
• A complete description of the property (including condition),
• The date of the appraisal and date of donation,
• The appraised fair market value and the method(s) used,
• The appraiser’s qualifications, education, and relevant experience,
• A signed statement of independence (if applicable).
5. Deliver the appraisal to the donor within the timeframe needed so it is dated no earlier than 60 days before donation.
6. If required by Form 8283 Section B, sign the form or the appropriate section per the instructions.
Common pitfalls and audit triggers
– Getting an appraisal dated more than 60 days before the donation.
– Using an appraiser who doesn’t meet IRS qualifications.
– Failing to attach a required qualified appraisal when the claimed deduction for an item or group exceeds $5,000.
– Overstating value without adequate support (IRS may question excessive valuations).
– Not filing Form 8283 when total noncash deductions exceed $500.
Examples (brief)
– Gift of an original painting appraised at $10,000: You need a qualified appraisal and must complete Section B of Form 8283 and attach the appraisal.
– Gift of publicly traded stock reported with a daily market price: Report on Section A of Form 8283 (publicly traded securities are reported in Section A).
Recordkeeping
Keep the appraisal, Form 8283, charity acknowledgments, and any supporting documents used to determine value. These materials support the deduction if the IRS requests substantiation.
Where to get official guidance (key IRS resources)
– IRS Publication 561, Determining the Value of Donated Property: (see the section on appraisals)
– Form 8283, Noncash Charitable Contributions (and instructions): and instructions:
– Investopedia summary
Bottom line
When a noncash charitable gift (an item or group of similar items) is valued over $5,000, a qualified appraisal prepared no earlier than 60 days before the donation is generally required and must accompany Form 8283. Choose a properly credentialed appraiser, document the valuation method and conclusion carefully, and follow Form 8283 instructions to substantiate and defend your deduction.