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.
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.
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.
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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.