The fair market value of an item is the amount you can use as a tax write-off if you donate your old stuff to a charity. It can come in handy when you get a new bedroom set and want to give the old one away, since donations help to decrease your taxes. Make sure to pay close attention to the Internal Revenue Service’s rules about such things to avoid taking the wrong deductions.
Check to make sure that the stuff you’re valuing actually falls under the heading of household items. According to the IRS, household items are things like furniture, linens, appliances and electronics. Don’t include paintings, jewelry or food.
Inspect all items for signs of wear and tear. The IRS lets you figure the fair market value of items in “good used condition,” but stuff with too much dirt or damage doesn’t count when you calculate the fair market value for a deduction.
Compare your household items to similar items in consignment stores or thrift shops. The fair market value of your items should be in line with what comparable items are selling for in those stores.
List all of the household items you are valuing. Include what the item is, what kind of condition it’s in, the cost of the item new, and what you’ve determined the fair market value to be. The IRS suggests that you support your claims with original purchase receipts that clearly show what each item cost new. Photographs proving your household items are in acceptable condition when you donate them will also help to support your claims of the fair market value for each item.
- If you have valuable household items in poor condition, get a formal appraisal. The appraised amount becomes the item’s fair market value, and the IRS will accept this amount even if the item is not in great condition. If you want to donate a household item with a value of $500 or more, an appraisal is essential no matter what kind of condition it’s in.
- Get a receipt from the charity if you make a single donation of household items with a fair market value of over $250. Keep this with your tax papers in case the IRS asks to see it.
- While it’s up to you to come up with the fair market value for your household items, if your valuation seems high, the IRS might ask you to offer proof of your claims. File such proof with your tax records for the year in which you claim these items as a deduction.
- When you claim the fair market value of your household items as a tax deduction, make sure you have donated them to a qualified charity. If you aren’t sure, the IRS maintains a searchable database of all qualified charities so you can check. If the charity isn’t on the list, you can’t write off your donation.