Understanding the Difference Between Appraisal Value and IRS Tax Form 8283 for Real Estate Donations
Appraisal Value: Determining Your Property's Fair Market Value IRS Tax Form 8283: Reporting Your Donation to the IRS

Understanding the Difference Between Appraisal Value and IRS Tax Form 8283 for Real Estate Donations


If you're considering donating real estate to a nonprofit, it's helpful to understand how your property's value is determined and how to claim tax benefits.* The property's appraisal value and IRS Tax Form 8283 are relevant elements in this process. While they are connected, each serves a different purpose.

Appraisal Value: Determining Your Property's Fair Market Value

When you donate real estate, the IRS requires you to determine your property's fair market value (FMV) through a qualified appraisal assessing the property based on factors like location, condition, and comparable sales in the area.

The appraisal is necessary because it sets the foundation for the potential tax deduction you can claim. It ensures that your property's value is accurate and fairly determined, but the appraisal alone doesn't secure your tax deduction. You'll need additional documentation, including IRS Tax Form 8283, to finalize your tax benefits.

IRS Tax Form 8283: Reporting Your Donation to the IRS

IRS Tax Form 8283 is essential to claim a tax deduction for a non-cash donation, like real estate, valued at over $5,000. After your property is appraised, you must complete and submit this form with your tax return to claim your deduction.

  • Section A: For real estate donations valued under $500,000, you'll provide basic information about your donation, including the appraised value.
  • Section B: If your property is worth more than $500,000, you'll need to provide more detailed information, including the appraiser's signature and the nonprofit's acknowledgment of the donation.

While the appraisal determines your property's fair market value, Form 8283 verifies the donation and ensures that it meets IRS guidelines. The IRS uses this form to confirm the accuracy of your reported donation and the appraised value, helping you avoid potential issues down the line.

Key Points to Remember

  • Appraisal Value: This establishes the fair market value of your donated property, serving as the basis for your potential tax deduction.
  • Tax Form 8283:This form is required to report your donation and officially claim a tax deduction for any non-cash donation over $5,000, including real estate.

By understanding both the appraisal process and the importance of IRS Tax Form 8283, you can confidently move forward with your real estate donation, knowing that you're fully compliant with IRS requirements. Giving Property guides you through each step, ensuring a smooth donation process that maximizes your impact.

Ultimately, by taking the time to follow these steps, you're securing a valuable tax benefit and making a significant contribution to the nonprofit community. Real estate donations can be complex, but with the proper guidance, you can turn your property into a powerful tool for change.



**This article is for informational purposes only. Please consult your tax advisor to understand your unique situation.