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INFORMATION

What Information is Included in a Qualified Appraisal?

  • The name, address, and taxpayer identification number of the qualified appraiser and, if the appraiser is a partner, an employee, or an independent contractor engaged by a person other than the donor, the name, address and taxpayer ID number of the partnership or employer
  • The qualifications of the qualified appraiser who signs the appraisal
  • A statement that the appraisal was prepared for income tax purposes
  • The date (or dates) on which the property was valued
  • The appraised Fair Market Value on the date (or expected date) of contribution
  • The method of valuation used to determine the Fair Market Value, such as the income approach, the comparable sales or market research data, or the replacement cost less depreciation approach
  • The specific basis for the valuation, such as any specific comparable sales transaction
  • A description of the property in sufficient detail for a person who is not generally familiar with the property
  • The physical condition of any tangible property
  • The date (or expected date) of contribution
  • The terms of any agreement or understanding entered into (or expected to be entered into) by or on behalf of the donor

How is an Appraisal Valued?

A property is valued at its Fair Market Value as long as the holder has basis in the property, meaning it has not been fully depreciated if held for business use.

The factors used in determining the Fair Market Value include:

  • The cost or selling price of the item
  • Sales of comparable property
  • Replacement cost
  • Opinions of experts

The original cost or selling price is a good indication of the property’s value if the following conditions apply:

  • The purchase or sale took place close to the valuation date in an open market
  • The purchase or sale was at “arm’s length”
  • The buyer and seller knew all relevant facts
  • The buyer and seller did not have to act
  • The market did not change between the date of purchase/sale and the valuation date

The Sales of Comparable Property is a good indicator when the following variables can be determined:

  • How similar is the property sold to the property donated?
  • How close is the date of sale to the valuation date?
  • Was the sale at “arm’s length”?
  • What was the condition of the market at the time of sale?

The Opinion of Experts can be used when:

  • Is the expert knowledgeable and competent?
  • Is the opinion thorough and supported by facts and experience?

What Constitutes a Qualified Appraiser?

A qualified appraiser will have the following credentials:

  • Has earned an appraisal designation from a recognized professional appraiser organization with demonstrated competency in valuing the type of property being appraised

OR

  • Has met certain minimum education and experience requirements

The minimum education and experience requirements are:

  • For real property, the appraiser must be licensed or certified for the type of property being appraised in the state in which the property is located.
  • For property other than real property, the appraiser must have successfully completed college or professional-level coursework relevant to the property being valued and must have two years of experience in the trade or business of buying, selling, or valuing the type of property being described in the appraisal.

A qualified appraiser:

  • Will regularly prepare appraisals for which he or she is paid
  • Demonstrates verifiable education and experience in valuing the type of property being appraised
  • Has not been prohibited from practicing before the IRS under Section 330(c) of Title 31 of the United State Code at any time during the three-year period ending on the date of the appraisal
  • Is not an excluded individual
  • Must be able to complete Form 8283, Section B, Part III
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