We just remodeled our kitchen and donated the cabinets and countertops to an IRS approved charity. We also paid an IRS approved/certified appraiser to appraise the donation and create a form 8283 to be submitted with next year's tax return when we claim the donation.
Today I received an email from the appraisal company telling me the importance of populating part 1 of section B on form 8283 when I file. They said they can complete this section for a fee, I can have my accountant do it, or I can do it - it just needs to be done. I looked at this section of the form and it seems straightforward except for determining the cost basis in my case.
The cabinets and countertops we donated were original to the house as far as I know. The house was first sold in late 2004 and we bought it in 2012. Since the cabinets and countertops were part of the total cost of the house, how do we determine our cost basis in them?
I wonder if it really matters what the original cost basis was.
your donation is the lower of the original cost or the current market value. the 'sticks and stones' of a home depreciate over time (it's just the land value that causes the home to appreciate). So unless there was significant gold inlay or some sort of appreciating material (highly unlikely) in these cabinets, they are worth less now than when you purchased the house.
here are the instructions for the part you are questioning:
Columns (d)–(f). If you have reasonable cause for not
providing the information in column (d), (e), or (f), attach
an explanation so your deduction will not automatically be
You know D: 2012
You know E: "part of home purchase"
for F: personally, I'd include a statement that is it presumed the cabinets were worth more in 2012 and have depreciated since.
just my two cents
I agree with @NCperson I would also suggest that you could roughly evaluate the appraisal. you paid x for the house in 2012 from that subtract your estimate of the cost of the land and any other detached structures such as a garage or shed. this gives you just the cost of the house. does the appraised value seem reasonable in relation to the cost? if yes, go for it.
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