How to Calculate Fair Market Value of Furniture
Like other charitable donations, when you donate furniture to a charity, including Goodwill, you can take the value of that donation off on your taxes. The amount that can be written off for the donated furniture is based on the fair market value. Unfortunately, no simple formula exists for determining the fair market value of furniture. To calculate the fair market value, you must consider many different factors.
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Instructions
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Assume that furniture more than 20 years old has no value. Furniture that is either out of style or that is not in good or better condition is considered valueless for tax purposes. The exception to this rule is antiques, as they usually gain in value as they age and should be appraised to determine their worth.
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Estimate the replacement cost of the furniture that you are donating by simply looking through a few furniture ads and averaging the prices of similar pieces of furniture.
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Factor in depreciation. While estimating the replacement cost of an item is a good place to start, that estimate should not be your end number. Each year that you own a piece of furniture, the value of that item depreciates. Depreciation is also based on a number of factors, including the condition of the furniture and how many years out of style it is.
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Consider the price that most people would be willing to pay for furniture of the same style in a similar condition. Keeping this in mind, designer brand names are almost always worth more than unrecognizable product names.
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Tips & Warnings
When donating furniture to a charitable donation, always get a receipt if you want to write the donation off on your taxes. The receipt is your proof of donation in case you are audited. It is also advisable to keep a list with each piece of furniture donated and the estimated fair market value of each item. The receipt is not itemized and the list can be beneficial if you are audited by the IRS.
If you are writing off more than $500 in furniture donations on your taxes in any given year, be prepared to fill out an additional form with your tax return. IRS Form 8283 is required for donations over $500.
