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I bought a property that is appraised at $50K for $7,700. If I donated the property, can I claim the donation for $50,000 on my taxes?
ANSWER
Expert Maria Golod's Answer:
The deduction for contributed property is usually measured by the lesser of the property’s basis (cost) or its Fair Market Value on the date the contribution is made.
If you have held the property for more than one year, it is classified as long-term capital gain property. You may deduct the full fair market value on the date of the contribution of the donated property, but the total value of such property may not exceed 30% of your Adjusted Gross Income for gifts to a public charity. No more than 20% may be deducted for gifts to a private foundation. In addition to the above, the total deduction for all gifts (to include long-term capital gain property, cash, etc) may not exceed 50% of your Adjusted Gross Income.
You must get a qualified appraisal made by a qualified appraiser.
A qualified appraisal must meet certain requirements.
- Is made, signed, and dated by a qualified appraiser in accordance with generally accepted appraisal standards,
- Meets the relevant requirements of Regulations section 1.170A-13(c)(3) and Notice 2006-96, 2006-46 I.R.B. 902
- Relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property,
- Does not involve a prohibited appraisal fee.
You must receive the qualified appraisal before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property. If the deduction is first claimed on an amended return, the qualified appraisal must be received before the date on which the amended return is filed.
Form 8283, Section B, must be attached to your tax return. Generally, you do not need to attach the qualified appraisal itself, but you should keep a copy as long as it may be relevant under the tax law.
