How to Value In-Kind Donations for Tax Deductions: FMV and Form 8283

To value in-kind donations for tax deductions, you use fair market value: the price the property would sell for between a willing buyer and willing seller, both reasonably informed and neither under pressure to complete the deal.¹ That’s not what you paid, not the replacement cost, and not what you wish the item were worth. It’s what the property would actually fetch in a current sale. How you arrive at that number, and how much paperwork you need to back it up, depends on what you gave, how long you owned it, and how much you’re claiming.

Three Ways to Arrive at Fair Market Value

Appraisers and the IRS recognize three standard approaches to valuation. Most donors use the first; the other two matter for specific categories of property.

Sales comparison. Look at recent sale prices of similar property. This works for anything with an active resale market, including used furniture, clothing, electronics, and vehicles.
Cost or replacement. Estimate what a similar item in comparable condition would cost to buy today, then adjust down for wear, age, and obsolescence.
Income approach. Calculate the present value of future income the property is expected to produce. This applies to rental real estate, patents, and other income-producing assets.

Household donations almost always rely on sales comparison. Unusual or high-value items typically call for a professional appraiser who will use one or more of these methods and document the reasoning.

How Your Holding Period Changes the Number

The length of time you owned the property before donating it decides whether you deduct full fair market value or only your original cost.

If you held the property more than one year and it would have produced a long-term capital gain on sale, you can generally deduct the full fair market value.² Appreciated stock is the textbook case: shares you bought for $2,000 five years ago and are worth $10,000 today give you a $10,000 deduction, and you never pay tax on the $8,000 gain.

If you held the property one year or less, your deduction is capped at the lower of fair market value or your cost basis. The same reduction applies to property that would have produced ordinary income if sold, such as business inventory or creative works you produced yourself.² Tangible personal property gets reduced as well if the charity’s use is unrelated to its exempt purpose. Donating a painting to a hospital that hangs it in a lobby is a different tax outcome than donating that same painting to a museum that exhibits it.

Rules for Common Property Types

Household Goods and Clothing

The IRS treats the best indicator of value for used furniture, appliances, and clothing as the price similar items actually sell for in thrift shops and consignment stores.¹ A winter coat you bought retail for $300 may have a thrift-store value of $25. Retail price and replacement cost are the wrong reference points.

Clothing and household items must be in good used condition or better to be deductible at all. The only exception is a single item worth more than $500 that isn’t in good condition, and that requires a qualified appraisal to support the value.³

Publicly Traded Securities

For stocks and bonds traded on a public exchange, fair market value is the average of the highest and lowest quoted selling prices on the gift date.¹ If the day’s high was $52 and low was $48, the per-share value is $50. If no trades occurred that day, average the means from the nearest trading days on either side.

Non-publicly traded stock is different. If you claim more than $5,000 for shares that don’t trade on a public exchange, you need a qualified appraisal, with no exception.¹

Vehicles

Vehicle donations often deduct for much less than donors expect. If the charity sells the car without significant use or improvement, your deduction is limited to the actual sale price the charity received, not the Kelley Blue Book value.⁴ A car you think is worth $5,000 that sells at auction for $1,200 gives you a $1,200 deduction.

You can claim full fair market value only if the charity makes significant use of the vehicle, materially improves it, or gives or sells it at a steep discount to a person in need as part of its charitable mission.⁴ The charity must send you a written acknowledgment on Form 1098-C within 30 days of the sale or contribution, and you cannot claim any deduction without that form.

Intellectual Property

Patents, copyrights, and trademarks work differently from most property. The deduction is generally reduced to your cost basis even if you’ve held the property long-term.² The donor may be eligible for additional deductions in later years based on income the charity earns from the property. Patents and similar intellectual property are exempt from the qualified appraisal requirement even above $5,000, though Form 8283 is still required if the deduction tops $500.¹

What You Cannot Deduct

The value of your time and professional services is never deductible. Legal advice, accounting work, graphic design, and any other service you donate produces no charitable deduction, regardless of what you would normally charge. What you can deduct are unreimbursed out-of-pocket expenses you incur while volunteering: supplies, mileage, and travel costs directly connected to the volunteer work. Keep receipts, because these follow the same documentation rules as any other non-cash gift.

Documentation by Dollar Threshold

The paperwork required scales with the size of the gift, and the thresholds are strict.

$250 or more per contribution. You need a contemporaneous written acknowledgment from the charity before you file. It must name the organization, describe the property (the charity does not assign a value; that’s your job), and state whether the charity gave you anything in return. If it did, the acknowledgment must include a good-faith estimate of that value so you can reduce your deduction.⁵

More than $500 in total non-cash gifts for the year. Attach Form 8283 to your tax return.³

More than $5,000 per item or group of similar items. A qualified appraisal is required (with narrow exceptions for publicly traded securities, vehicles reported on Form 1098-C, and certain intellectual property).³

For your own records, keep the fair market value, the valuation method you used, the gift date, and how you originally acquired the property. If you held the item a year or less, record your cost basis, since that caps the deduction.¹ Photograph high-value items before donating. An auditor who can see the condition of a donated antique is far more likely to accept your valuation than one reading a text description.

Qualified Appraisals: What Counts

Above the $5,000 threshold, art, real estate, antiques, closely held stock, collectibles, and equipment all need a qualified appraisal. The appraisal must be completed no earlier than 60 days before the donation and no later than the due date of your return, including extensions.³ The report must describe the property and its condition, state the valuation method, provide the appraised fair market value, and list the appraiser’s qualifications. A missing or incomplete appraisal can wipe out the entire deduction.

A qualified appraiser holds a recognized professional designation or meets specific education and experience standards. Several people are barred outright from serving as the appraiser:¹

The donor and the receiving charity.
The person who sold or gave the property to the donor, unless the donation occurs within two months of acquisition and the appraised value doesn’t exceed what the donor paid.
Employees of any of the above. If you bought a painting from a gallery, no one at that gallery can appraise it.
Related parties, meaning family members and other related persons under the tax code.

The appraiser’s fee cannot be a percentage of the appraised value or of the deduction ultimately allowed. Percentage fees create an obvious incentive to inflate the number, and the IRS treats any such arrangement as disqualifying.¹ Flat fees or hourly rates are the norm.

Filling Out Form 8283

Form 8283 has two sections, and the section you use depends on the value of the gift.

Section A covers items where you claim more than $500 but no more than $5,000 per item or group of similar items. It also covers publicly traded securities at any value. You fill in the charity’s name, the donation date, a description and condition of the property, how you acquired it, your cost basis, and the fair market value.⁶

Section B is for gifts above $5,000 per item or group, other than publicly traded securities and certain exempt categories. It requires three signatures in addition to yours: the qualified appraiser signs a declaration, and an authorized representative of the charity signs an acknowledgment of receipt.⁶ E-filing software walks you through attaching the form; paper filers physically attach the signed form to the return.

How Much of the Valuation You Can Actually Deduct

Even with a valid number and complete paperwork, annual deduction ceilings apply. The IRS caps charitable deductions as a percentage of your adjusted gross income, and the caps are tighter for non-cash gifts than for cash.

Appreciated capital gain property donated to a public charity (churches, schools, hospitals, and organizations that pass the public support test) is capped at 30% of AGI. The same property donated to a private foundation is capped at 20%.⁷ Property where the deduction is limited to cost basis (short-term holdings or ordinary income property) is generally capped at 50% of AGI for public charities.

Excess amounts carry forward for up to five years.⁷ A $100,000 stock gift on a return that only allows $60,000 rolls the remaining $40,000 into next year under the same percentage caps.

For tax year 2026, a new floor also applies: you can only deduct contributions that exceed 0.5% of your AGI. Smaller routine gifts below that threshold produce no tax benefit. Itemizing only pays off if total deductions exceed the standard deduction, which for 2026 is $32,200 for married couples filing jointly, $16,100 for single filers, and $24,150 for heads of household.⁸

Penalties for Overstating Value

The IRS enforces valuation rules with escalating penalties. Claim a value that is 150% or more of the correct amount and it counts as a substantial valuation misstatement, triggering a 20% penalty on the resulting tax underpayment. Claim 200% or more and it becomes a gross valuation misstatement with a 40% penalty.⁹

A substantial misstatement can be defended by showing you obtained a qualified appraisal and made a good-faith investigation of value. That defense disappears for gross misstatements. If the IRS finds your claimed value was double or more the correct number, good faith does not save you from the 40% penalty.¹⁰

Keep the acknowledgment letters, appraisal reports, and copies of Form 8283 for at least three years from the date you file the return claiming the deduction.¹¹ If any portion of the deduction carries forward, keep the file until three years after the last return on which it appears.

1
Internal Revenue Service. Publication 561, Determining the Value of Donated Property
2
Office of the Law Revision Counsel. 26 U.S. Code 170 – Charitable, Etc., Contributions and Gifts
3
Internal Revenue Service. Instructions for Form 8283 (Rev. December 2025)
4
Internal Revenue Service. IRS Guidance Explains Rules for Vehicle Donations
5
Internal Revenue Service. Charitable Contributions: Written Acknowledgments
6
Internal Revenue Service. Form 8283, Noncash Charitable Contributions (Rev. December 2025)
7
Internal Revenue Service. Publication 526, Charitable Contributions
8
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
9
Office of the Law Revision Counsel. 26 U.S. Code 6662 – Imposition of Accuracy-Related Penalty on Underpayments
10
Internal Revenue Service. Reasonable Cause and Good Faith
11
Internal Revenue Service. Topic No. 305, Recordkeeping