Fair Market Value for Charitable Donations: IRS Definition Explained

Bydeductibleduck
fair market value charitable donation
Not tax advice. This article is general educational information. For advice about your situation, talk with a qualified tax professional. IRS rules can change, and your facts matter.

Primary sources (read the originals):

Fair Market Value for Charitable Donations: IRS Definition Explained

If you donate non-cash items—clothing, furniture, household goods, electronics—your deduction usually depends on fair market value (also referred to as FMV). That sounds straightforward until you try to pick a number you can defend.

This article explains what FMV means under IRS guidance, what mistakes cause problems, and how to pick values that are both reasonable and conservative.

Fair market value (FMV) in one sentence

The IRS generally describes fair market value (FMV) as the price property would sell for on the open market—a willing buyer and a willing seller, neither forced to act, and both with reasonable knowledge of the relevant facts. (See IRS Pub. 561.)
Source: https://www.irs.gov/pub/irs-pdf/p561.pdf

What FMV is not

FMV is usually not:

  • What you originally paid
  • What it would cost to buy a brand-new replacement
  • The “highest price you can find online”
  • A hopeful number based on sentimental value

A conservative FMV mindset (practical)

If you’re unsure, the safest default is often to choose a reasonable, defensible value that matches condition, age, and typical resale demand. That means:

  • Prefer actual sold comparables over active listings
  • Adjust down for wear, missing parts, stains, and outdated models
  • Document why your value is reasonable (simple notes are fine)

Why FMV matters (and where people get tripped up)

For many taxpayers, the biggest non-cash mistakes are not malicious. They’re structural:

  • People confuse FMV with the original price tag.
  • People use online listings instead of sold prices.
  • People don’t adjust for condition.
  • People don’t keep simple notes explaining how the value was chosen.

FMV matters because it affects:

  • your deduction amount,
  • whether Form 8283 applies,
  • and how credible your records look if questioned later.

How to think about FMV like an auditor (without paranoia)

If someone asked you, “How did you get this number?” a strong answer is:

  • “I used a conservative resale value range for items in this condition, and I recorded the details the day I donated.”

A weak answer is:

  • “I googled it once and picked the highest number I saw.”

FMV is fact-dependent

Two identical items can have different FMV depending on:

  • condition (new vs worn vs damaged),
  • completeness (missing accessories or parts),
  • age and obsolescence (electronics especially),
  • demand (seasonality and local market demand).

Practical FMV methods the IRS expects to be reasonable

The IRS does not require one single method for most ordinary household donations. The key is being reasonable and consistent.

Method 1: Use a reputable value guide range

Many donors use value guide ranges for common items. The critical step is choosing a value within the range that matches the condition and age of your item.

Method 2: Use sold comparables (not listings)

If you use marketplace data, prioritize:

  • sold results (completed sales),
  • similar condition,
  • similar model/version.

For electronics, look for the same generation/model number where possible.

Method 3: For high-value property, follow appraisal rules when required

When you get into higher-value property, IRS rules can require a qualified appraisal and additional forms. See Form 8283 instructions and Pub. 526.

Key non-cash thresholds (common checkpoints)

These are commonly-cited non-cash documentation checkpoints in IRS materials (see Pub. 526 and Form 8283 instructions):

  • $250 or more: contemporaneous written acknowledgment required (in many cases)
  • Over $500: Form 8283 is generally required for non-cash contributions (and for groups of similar items over $500)
  • Over $5,000: a qualified appraisal is often required (with exceptions, e.g., publicly traded securities), and Section B of Form 8283 is used
  • Clothing/household item not in good used condition: special rule—deduction generally not allowed unless you meet the “good used condition or better” requirement; if claiming more than $500 for a single such item, Section B/appraisal rules can apply (see Pub. 561 & 8283 instructions)

Sources:

The “good used condition” rule for clothing and household goods

The IRS generally says you can’t take a charitable deduction for clothing unless it is in good used condition or better (see Pub. 561). This is a common gotcha—especially for items people donate because they’re worn out.

Source: https://www.irs.gov/publications/p561

What “good used condition” means in practice

You don’t need perfection. You do need:

  • no major stains,
  • no rips/tears that affect usability,
  • no broken zippers/buttons that make it unwearable.

If you wouldn’t realistically buy it at a thrift store, treat it as non-deductible.

How to choose an FMV number you can defend

Here’s a simple approach that works for most households:

  • Describe the item specifically
  1. “Men’s winter coat, wool blend, very good condition”
  • Decide the condition class
  1. Fair / Good / Very Good / Like New (be honest)
  • Pick a value based on a range
  1. Choose a mid-to-low value when unsure
  • Write a 1-line note
  1. “Value based on thrift resale range; adjusted down for wear.”

That last step is surprisingly powerful. It turns a number into a reasoned estimate.

Common FMV mistakes to avoid

Mistake: using retail replacement prices

Retail is almost never FMV for used household goods.

Mistake: valuing donations as a “bundle” with one large number

Bundles are fine, but describe what’s inside:

  • “Kitchenware bundle: pots (2), pans (2), utensils (20), good condition.”

Mistake: zero documentation at higher thresholds

Once you cross certain thresholds, documentation becomes more formal. Use the IRS checklist mindset:

  • receipts/acknowledgments,
  • Form 8283 where required,
  • appraisal for higher-value items.

Recordkeeping that reduces stress later

For charitable deductions, the IRS focuses on substantiation—proof you made the gift and a reasonable basis for the amount you claimed. A practical system includes:

  • Date of donation
  • Donee/charity name (and location if helpful)
  • Description of what you gave (specific beats vague)
  • FMV method (value guide range, sold comparables, appraisal when required)
  • Receipt or written acknowledgment when required

For $250 or more, you generally need a contemporaneous written acknowledgment from the charity with specific details (see IRS pages and Pub. 526).
Source: https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments

How Deductible Duck helps with FMV consistency

A practical donation tracker helps you:

  • keep item descriptions consistent,
  • reuse common items and ranges,
  • maintain totals by year,
  • export your records cleanly.

Even if you’re not using automated valuation, the biggest win is repeatability.

Next reads

Start Tracking Your Donations Now

Enter those valuable donations year-round and export an IRS-friendly report when you’re ready to file, just like ItsDeductible. Only $29.99/year

I want to track my donations

Similar Posts