How to Determine the Value of Donated Property
If you give an asset to charity, you can deduct it from your taxable income on your federal tax return, assuming you itemize your deductions. To make the deduction, you will need to value the asset first. Here are some of the guidelines that you can follow to determine that value.
Other People Are Reading
Instructions
-
-
1
Find the fair market value of the asset you give to charity. By fair market value, the IRS means a price that a willing buyer will pay a willing seller, assuming no coercion and both parties have the required facts to assess the asset. Those facts may be how much comparable property is valued, its replacement cost, a price based on expert opinion or the cost of the asset if it was purchased in the recent past.
-
2
Make a donation of household goods or personal items. You must recognize that these items depreciate, so they most likely have less value than you think. The best way to determine your deduction is to get an appraisal of the property from the charity, itself.
-
-
3
New rules determine the size of deductions available for a car, automobile or other vehicle. There are few questions the IRS will ask about a deduction of $500 or less, but if you claim a higher amount, your deduction depends on what the charity does with the vehicle. If it sells it at auction, then the amount of your deduction will be the gross price received for the vehicle. If the charity fixes it up before selling it or giving it to someone in need, it must inform you in writing that the fixes were made and assign a value of your vehicle donation.
-
4
Give real estate to charity and there are several ways to assess its fair market value. First, have a real estate agent find property that has recently sold that is comparable to your donation. If it is income-producing property, you may use the so-called "capitalization of income" method to arrive at the fair market value. Or you can use the cost to replace the property.
-
5
Donate a collection to charity and the size of your tax deduction can be based on a professional appraisal. Or you can assign a value by determining selling prices in catalog or books. The latter method is appropriate if you are giving something like a stamp or coin collection to charity. The former is more acceptable if you are giving fine art or jewelry to charity.
-
1
Tips & Warnings
Whether or not you have an appraisal of your gift to charity, the IRS has the final word as to the amount you may deduct. If the IRS is of the opinion that you have deducted too much, it can arbitrarily lessen the deduction based on its own findings.
