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Why You Need an Appraisal

Maybe you've got some antiques you inherited from your aunt, or a small but growing collection of vintage Star Wars toys, or there is that mysterious oil portrait of two little kids that you picked up at a second-hand store a few years back. You don't really know that much about what these things are really worth. Do you need an appraisal?


Well, NEED is such a strong word. There are few things in life that we truly NEED. But there may be several instances in which an appraisal would be very much advised. I guess, to the extent that your situation involves paying state or federal taxes, you might actually be able to go so far as to say that an appraisal is NEEDED, lest you run afoul of the law. But there are definitely other situations where an appraisal, while not being strictly required, would be very helpful. Let's run through a few of the most common situations.

  1. Insurance. Policies vary from insurance company to insurance company, but generally, there are limitations to homeowners' or renters' insurance that are important to keep in mind if you happen to own items of exceptional value. You may find that additional insurance is necessary to adequately cover you in the case of loss. This would be one case where an appraisal might be required - to provide a reliable determination of value that both the property owner and the insurance company can use to ensure sufficient theft or fire insurance. In addition, should you need to make a claim for damage or loss of your George Nakashima coffee table, for example, an appraiser may need to get involved to determine the replacement cost for the table.

  2. Estate tax liability. State and federal taxes are a complicated subject and you should always be guided by your accountant or tax advisor. But in determining the tax owed, an appraisal may be required in order to value all of the belongings of the estate. Federal taxes are not owed unless the estate is worth more than $13 million. This means that very few estates will be subject to the tax. Most states do not have an estate tax, but some have inheritance taxes. For example, in Pennsylvania, the tax is 4.5% of the amount of the estate that is passed on to direct heirs. The estate does not pay this tax, the heir does. And it applies to all estates, not just ones above a certain valuation. So this could be another time when having a professional appraisal done could be worth it.

  3. Charitable donation. When making a non-cash donation to charity, your tax deduction for that donation is dependent on the valuation of the items donated. For common donations, such as used clothing and furniture given to a Goodwill or other such organization, an appraisal is rarely required. In fact, formal appraisals are optional for any items valued at less than $5,000. (Unless the items are in "poor" condition, in which case an appraisal is required for items valued at greater than $500.) But for items worth more than $5,000, an appraisal by a "qualified appraiser" is required and the appraiser must sign IRS Form 8283, the form used to claim the non-cash charitable donation deduction.

  4. Equitable distribution. There are a few situations in which more than one person may have an interest in a given set of personal property. Some examples include marriage, a business partnership, or among multiple heirs to an estate. Situations (such as divorce) can arise when the property in question must be divided among the individuals involved. Even in situations where there is no animosity among these individuals, an appraisal may be advisable in order to ensure all parties are equally informed, to ensure fairness in distribution of the personal property, and / or to help in a negotiated settlement.

There are other situations when an appraisal can be useful. Commonly, I have potential clients who approach me looking for an appraisal because they are considering selling something they own or even because are simply curious. In some cases, an appraisal may be needed if a particularly valuable item of personal property is to be used as collatoral for a loan or in another financial transaction. These are certainly legitimate reasons to want to have an independent, objective, and justifiable determination of value. Hiring a professional appraiser is usually your next step. You can find a qualified appraiser by asking your lawyer or financial advisor or by visiting one of the professional appraisal associations, such as The International Society of Appraisers, the American Society of Appraisers, or the Appraisers Association of America.


If you are curious to know more, please contact me and we can discuss your situation. If you are one of those who just wants to know "what is it worth?" for personal reasons, consider using my online appraisal page, where you can get a professional opinion for an affordable flat rate of only $59 per item. You simply fill out a form and upload photographs. I can do the rest.


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