Are Appraisal Fees Tax Deductible?

Home appraisal fees are not tax deductible.

Most mortgage lenders require an appraisal before approving a home loan to ensure that a property is priced at or below market value.The Internal Revenue Service, or IRS, does not allow a homebuyer to deduct appraisal fees associated with the purchase of a home. If you're donating the property, however, the appraisal fee is claimable on your federal tax return.


Non-Deductible Expense

Some closing costs associated with a home purchase are tax deductible expenses, but a home appraisal and fees paid to an appraiser are not. A mortgage lender uses an appraisal to validate the value of the property and assess a loan limit. You can not itemize appraisal fees as deductions on Schedule A of your federal tax return.


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Cost Basis

According to Realtor Magazine, a homebuyer does not deduct fees for a lender-requested appraisal, and those required fees do not add to the cost basis of a home. Appraisal fees are a necessary part of the home loan approval process, but they do not increase the selling price or cost basis.


Donated Property

As long as you meet the IRS' two percent of adjusted gross income limit, you can deduct appraisal fees used to determine the fair market value of a donated property. Tax Map states that the fees are not deductible as contributions, but you can claim them as miscellaneous itemized deductions on Schedule A of Form 1040.


VA or FHA Appraisal

Government-funded mortgage loans, like the Veteran's Affairs, or VA, loans and the Federal Housing Administration, or FHA, loans require an appraisal before a lender approves the mortgage. According to Tax Guide, even though an appraisal is necessary to acquire funding, all fees associated with the appraisal are not tax deductible.