Are you planning on moving soon? Or perhaps you’re in the process of decluttering your home and want to donate some of your old things? Maybe both of these statements are true. Whatever the case is, you will need to estimate the value of household goods before you do anything else. Read on to find out why you should do this and how to do it properly.
Why You Should Estimate the Value of Household Goods
Before we delve deeper into how to determine the value of your belongings, let us take a look at why you would want to do so in the first place. In general, there are two main reasons – relocation or donations. Of course, you might be thinking about calculating your overall wealth for entirely different purposes as well.
Insurance Purposes When Moving
When you hire relocation specialists to provide you with moving services, the company will provide you with basic insurance for your belongings. This policy is, of course, directly related to how valuable your belongings are. Moving insurance is especially important if you are using the packing and unpacking solutions provided by the relocation company.
Likewise, if you are using auto transport services, you will want your car to be insured. In short, if a relocation company will be handling your belongings to any extent, those objects need to be insured. And to insure them properly, you need to know how much they’re worth.
Tax Deduction When Donating Stuff to Those in Need
If you are planning on donating some of your belongings to charity, you can apply to the IRS for a tax deduction. However, make sure you follow the rules and regulations set by the IRS to avoid any disappointment.
Sometimes, we simply want to know how much all our stuff is worth. Or maybe you are in the process of writing a will and need this information for that purpose. In short, there is a long list of other personal reasons why someone might want to calculate how valuable all their stuff is.
Now that we’ve taken a look at why you should determine how much your belongings are worth, let us take a look at some of the best ways to do it properly.
Determine the Fair Market Value of Donations
When donating to charity, it is important to stick to the rules set by the IRS. The process should look something like this:
- Create a home inventory. Put together a list with the photos of all the things you are planning to donate. Make sure you know exactly how and where to donate old appliances, clothes, furniture, and other objects around your home.
- Check the condition of your stuff. Usually, only the items that are like new or in good condition are applicable for a tax write-off. If you are donating heavily used things, the IRS will overlook them.
- Consult an online donation worth guide. Most charities provide these guides on their websites to make it easier for donors to figure out the right amount. Use the guide to determine the worth of each piece of furniture, clothing, or other kinds of items.
- Used product costs. Alternatively, you could go online or visit your local thrift shop and see for how much money, on average, similar products are being sold. Refer to this as your guide for calculating the fair market value.
- File the documentation to the IRS. Turn in your inventory, the guide, the photos, and any receipts you still might have to the IRS.
Let Your Movers Calculate the Insurance
If you have moved before, you’ll know that relocation companies offer moving quotes. As a rule of thumb, this quote also includes mandatory insurance for all the items being handled by the movers. In other words, movers will calculate the worth of your items for you. Keep in mind, however, that this only includes those items that they will pack, load on the truck, and transport to your new home. Also, the basic insurance usually doesn’t include highly valuable items, so you should consider getting their worth estimated by an expert and taking out a separate policy.
Use Online Calculators for Various Products
Luckily, we live in an age where almost anything can be done online. This doesn’t exclude calculating the FMV of your items. In other words, there are free online estimators and calculators you can use to determine the right amount. Keep in mind, however, that these estimators can sometimes be unreliable, due to not being able to determine the condition of an item or if they aren’t being updated regularly. There may also be some privacy issues on less reliable websites.