Here are the most common reasons to have an appraisal:
- Charitable Contributions
- The IRS requires an appraiser to sign off on non-cash donations of $5,000 or more on IRS Form 8283.
- If an item is valued at $20,000 or more, a complete copy of the appraisal is requested by the IRS.
- Insurance Coverage
- An appraisal can be performed to obtain insurance coverage or after damage or a loss has occurred to determine value.
- Check with your insurance provider to determine what documentation they require if a loss occurs.
- Read the fine print on what items are covered to determine if you need additional policies to protect your possessions.
- Estate Tax
- Division of Property
- Dividing property among heirs or beneficiaries, during divorce and other life situations are aided by a third-party that can add value to the items being dispersed.
- Sometimes you just do not know what something is worth and an appraisal can help.
It is important to note that appraisals are not interchangeable from one category to another. For example, an insurance policy may ask for a replacement cost, while the IRS requests fair market value.