Elements Of A Qualified Appraisal For Charitable Contributions As Laid Down By The Irs

Donating art or antiques can be a smart way to support a charity while claiming a tax deduction. But if your noncash gift is valuable, the IRS requires a “qualified appraisal” to substantiate its fair market value (FMV). For collectors and appraisers, understanding precisely what the IRS expects will save time, reduce audit risk, and help ensure the deduction holds.

Below is a practical, detail-rich guide to the qualified appraisal rules, tailored to art and antiques.

When You Need a Qualified Appraisal

• The $5,000 threshold: If you claim a deduction of more than $5,000 for a single item or for a group of similar items, you generally must obtain a qualified appraisal and complete Section B of Form 8283. “Similar items of property” are aggregated across all donees for the year. For example, donating five similar prints to different museums can still trigger the $5,000 appraisal requirement when the combined claimed deduction exceeds $5,000.

• Exceptions: Publicly traded securities do not require a qualified appraisal. Certain other categories have special rules, but for art and antiques, assume the $5,000 threshold triggers the requirement unless a narrow exception applies.

• Over $20,000 (art): For any artwork valued at $20,000 or more, you must attach a complete, signed qualified appraisal to your tax return. The IRS may also require a photograph of each item and can refer the valuation to its Art Advisory Panel.

• Over $500,000 (any property): If you claim a deduction of more than $500,000 for any item or group of similar items, you must attach the qualified appraisal to your return, regardless of property type.

• Related-use and three-year disposition rules: Your deduction for tangible personal property (like art/antiques) may be limited to cost basis if the charity’s use of the donated property is unrelated to its exempt purpose, or if the charity disposes of the property within three years and does not certify related use. Appraisals do not change this limitation; they simply support the claimed FMV when a FMV deduction is allowed.

• Contemporaneous written acknowledgment: For any donation of $250 or more, you also need a written acknowledgment from the charity. This is separate from the appraisal requirement, and both are needed when applicable.

Who Counts as a Qualified Appraiser

The IRS uses the term “qualified appraiser” very specifically. An appraisal prepared by someone who fails these tests will not substantiate your deduction.

A qualified appraiser must:

• Have verifiable education and experience valuing the type of property being appraised (art, period furniture, silver, tribal art, photography, etc.). Typically this includes a recognized professional designation from an appraisal organization or documented minimum education and years of experience for the specific property category.
• Regularly perform paid appraisals in the ordinary course of business.
• Be independent: not the donor or donee, not a party to the original acquisition of the property, and not related to the donor or donee. Independence includes avoiding any conflicts of interest that could compromise objectivity.
• Be in good standing: not prohibited from practicing before the IRS and not disqualified due to certain criminal or professional sanctions.
• Use a fee structure that is not contingent on the appraised value or the amount of the donor’s tax deduction.

Practical tips:

• For art and antiques, look for specialists who routinely appraise the specific artists, periods, or categories at issue.
• Confirm the appraiser carries errors and omissions insurance and follows a recognized set of standards (for example, USPAP).
• Verify that the appraiser is willing to sign Form 8283 and stand behind the report if the IRS requests additional information.

Timing, Format, and Signature Requirements

Deadlines and formalities matter. The IRS can disallow deductions where timing or signatures are off, even if the value is otherwise supportable.

• Appraisal window: The appraisal must be prepared, signed, and dated no earlier than 60 days before the date of the contribution and no later than the due date (including extensions) of the tax return on which the deduction is first claimed.

• Effective date versus report date: The appraisal should clearly state the “effective date” of value (usually the donation date) and the “report date.” Both must fall within the allowed timeframe relative to the return filing deadline.

• Signatures: The appraiser must sign the appraisal report. The appraiser also signs Section B, Part III of Form 8283. The donor signs Form 8283, and the charity acknowledges receipt in Section B, Part IV. Keep copies of all signed documents.

• Statement of use: The appraisal must state it is being prepared for income tax purposes, identify the intended use (charitable contribution), and the intended users (donor and IRS).

• Attaching the appraisal: Attach the full, signed appraisal for art over $20,000 and for any contributions exceeding $500,000. Otherwise, retain it in your records and be prepared to provide it if requested.

• Photographs: For significant art donations (especially $20,000 and up), include clear photographs of each item in the report; this is often specifically required when attaching the appraisal to the return.

What the Report Must Include for Art and Antiques

A qualified appraisal is more than a number—it’s a complete, transparent analysis that allows the IRS to understand exactly what was valued, how, and why. For art and antiques, thorough object-level detail is expected.

Core elements the IRS expects in a qualified appraisal:

• Property identification:
  • Art: artist/maker, title, medium/materials, dimensions, signature/marks, edition number (if applicable), date of creation, catalog raisonné references if relevant.
  • Antiques/decorative arts: period/date, maker or attribution, materials/technique, dimensions, marks or labels, style/type, construction details.
• Condition: objective description of physical condition, including wear, losses, restorations, retouching, conservation history, and stability issues. For high value works, reference recent condition reports if available.
• Provenance and history: ownership history, exhibition history, published references, certificates of authenticity, and any expert opinions or scientific testing relevant to attribution or authenticity.
• Legal and use restrictions: any fractional interests, partial rights, rights of reproduction, donor-imposed restrictions, deed-of-gift terms, or encumbrances affecting marketability and value.
• Ownership and acquisition details: donor’s name and identifying info; date and manner of acquisition (purchase, gift, inheritance, exchange); cost or adjusted basis (if known). Basis does not set FMV, but it is required disclosure.
• Valuation details:
  • Effective date of valuation (typically the contribution date).
  • Definition of value used (fair market value).
  • The market selected (e.g., dealer/private sale market, secondary auction market) and justification for that choice based on the most common market for the item.
  • Approach and methods: generally a sales-comparison approach for art/antiques, with discussion of comparable sales selection, relevance, and adjustments.
  • Specific comparable sales data: source, date, venue (auction house/dealer), lot number if applicable, sale price and whether it includes buyer’s premium, object comparability analysis (medium, size, date, condition, subject matter, rarity, market demand).
  • Adjustments and rationale: explain any premiums (e.g., edition number, signature, special provenance) or discounts (e.g., condition, repairs, incomplete provenance, market saturation).
  • Resulting value conclusion: a single-point FMV or a supported range, with a clear final conclusion consistent with tax reporting.
• Appraiser credentials: appraiser’s name, business address, qualifications, professional designation(s), experience with the specific type of property, and statement of independence.
• Required declarations and assumptions: a statement that fees are not contingent on value or tax outcome; identification of any extraordinary assumptions; scope of work performed; statement of any inspection limitations.
• Exhibits: photographs, condition reports, provenance documents, laboratory reports, and copies or summaries of references used (catalogues raisonnés, scholarly texts, auction catalogues).

For multiple items (e.g., a collection of prints), the appraisal must detail each item. Summary tables are helpful, but they do not replace object-level descriptions and valuations.

Valuation Approaches and Evidence the IRS Expects

The IRS uses the fair market value standard: the price at which the property would change hands between a willing buyer and willing seller, neither under any compulsion to buy or sell, both having reasonable knowledge of relevant facts, in the most common market for the property.

For art and antiques, the sales-comparison approach is primary:

• Comparable selection: Choose sales that are as close as possible in medium, date/period, size, subject matter, condition, edition, and market tier. For artist markets with thin sales, explain why certain comps remain relevant.
• Market choice: Identify the most common market in which the item would typically be sold to a willing buyer. For many artworks and antiques, that’s the dealer/private sale market or the secondary auction market. Explain why your market selection is appropriate; retail asking prices may require discounting if selling most commonly occurs at auction.
• Price components: For auction comps, specify whether you used hammer price or hammer plus buyer’s premium; be consistent and explain your choice. FMV reflects what a buyer would actually pay, which often includes buyer’s premium in the real-world transaction.
• Adjustments: Quantify and explain adjustments for condition, scale, date/period desirability, series/edition positioning, signature, desirability of subject matter, provenance, and recent market trends. Keep adjustments transparent and supported by data, not rules of thumb alone.
• Special considerations:
  • Editions and multiples: Note edition size, number, state, paper, and whether the impression is signed/numbered or bears relevant stamps.
  • Blockage and assemblage: For large groups of similar items donated at once (e.g., a large batch of prints), consider whether marketing them all at once would depress prices (“blockage”) and whether staggered sales are typical. Explain any discount with market evidence.
  • Authenticity and attribution: If attribution is uncertain or market-controversial, address the risk and how it affects FMV. Cite authoritative sources or expert opinions as available.
  • Conservation status: Visible and structural condition issues are significant value drivers. Include professional condition insights where the market would consider them material.

The IRS often consults its Art Advisory Panel for high-value art. That’s not an audit by default, but it underscores why your comparables and analysis should meet professional standards and be easily reviewable.

Practical Checklist for Donors and Appraisers

For donors:

• Before you give:
  • Confirm whether the charity’s use is related to its mission to preserve FMV eligibility.
  • Aggregate similar items across all donations for the year to see if you cross the $5,000 threshold.
  • Choose an appraiser with a specialty in your property type and verify credentials.
• Documents to gather:
  • Purchase invoices, prior appraisals, provenance records, conservation reports, certificates of authenticity, photographs.
  • Your acquisition date and cost basis (if known).
  • The charity’s contemporaneous written acknowledgment (for $250+).
• During the appraisal:
  • Ensure inspection access and accurate condition documentation.
  • Confirm the appraisal’s effective date is the donation date and the report date is within the required window.
  • Review whether the market selected and comparables make sense for your item.
• Filing:
  • Complete Form 8283: sign as donor, obtain the appraiser’s signature (Section B, Part III) and the donee acknowledgment (Part IV).
  • Attach the signed appraisal for art over $20,000 and for any contribution over $500,000; include photos as required.
  • Keep everything in your records (including the appraiser’s full report and photos).

For appraisers:

• Scope and compliance:
  • Confirm you meet “qualified appraiser” criteria for this property type; decline if not.
  • Disclose your qualifications and independence; avoid contingent fees.
• Report content:
  • Include all required elements: detailed object descriptions, condition, provenance, effective date, market selection, methods, comps, adjustments, and a clear FMV conclusion.
  • Sign and date the appraisal; be prepared to sign Form 8283.
• Evidence:
  • Use recent, arms-length sales; cite sources precisely; include images of comps where feasible.
  • Explain adjustments with data, not generalities; address any weaknesses (limited comps, condition issues) head-on.
• Deadlines:
  • Deliver the report within the IRS timing window so the donor can file on time.

FAQ

Q: Do I need a qualified appraisal if my art donation is worth exactly $5,000? A: The appraisal requirement applies when the claimed deduction exceeds $5,000 for an item or group of similar items. At $5,000 exactly, an appraisal is not required; at $5,000.01, it is. Remember to aggregate similar items.

Q: Can my gallery or the charity appraise the item? A: Generally no. The appraiser must be independent and cannot be the donor, the donee, or a party to the original sale. A dealer who sold you the item would not be independent.

Q: What if I don’t know my cost basis? A: You should make a reasonable effort to determine it and disclose it in the appraisal and on Form 8283. Basis is a disclosure requirement; it does not set FMV. Lack of basis documentation can raise questions, so provide what you can.

Q: Is a prior insurance appraisal acceptable? A: Not by itself. Insurance appraisals often use replacement value for risk management, not FMV for tax. A qualified appraisal for charitable contributions must use the FMV standard and meet IRS content, timing, and signature rules.

Q: How far in advance can I commission the appraisal? A: No earlier than 60 days before the contribution date. It must also be completed by the return’s due date (including extensions) for the year you claim the deduction.

This article is for informational purposes and is not tax advice. For complex or high-value donations, consult a tax advisor in addition to engaging a qualified appraiser.