Am I missing something???

[pgerarde]

Have an order for an appraisal (turns out he had called all the other appraisers in the area and no one will touch this one...?!)

A couple acres with an older, two bedroom home. (sounds fine so far...) He is going to build a new home on the site of the old home (still seems ok...he only wants appraisal on what is there now...) He is donating the house structure only to the fire department...they are going to burn it down for practice. (Ok, maybe this is why the other appraisers backed off from this???) He said the house is in average condition but is too small and that is why he will be building a new home.

He wants an appraisal on the existing house structure. As he is donating the house to fire department for a practice burn, he wants market value on the exisitng structure to write off on his tax return.

We have plenty of land sales in the area. The Marshall & Swift cost estimator should be very helpful with the value of the structure itself and there are other parcels of land with older homes on them at this time.

I do not see any problem with doing an appraisal on the above. Am I missing something the other appraisers caught???

Thanks for your input.

Patti in Chino Valley

 

[Pamela Crowley (Florida)]

I don't see any major problem with this. If the other appraisers are turning it down then they either have more information than you do or are afraid of the IRS. Extra liabillity like this calls for a higher fee. Looking forward to others advise.

 

[airphoto]

Doesn't sound unusual at all .. do a vacant land appraisal, and subtract it from whatever he paid (his tax basis.) That's his loss due to loss(donation) of the structure. Don't see any extra work, or liability (Pam.)

 

[larryhaskell]

It seems that the owner simply wants to know the contributory value of a portion of the improvements. Specifically the house. Any other improvements like a well or septic shouldn't be effected. It would seem to me that the Cost Approach would be extremely important. Good luck. Let us know how it works out.

 

[Ray Ohler]

I don't know about the part Bill mentioned about deducting what he paid, I would leave that to an accountant. But sure, contributory value of the dwelling could be done.

 

[airphoto]

Ray,

Guess I wasn't clear .. deduct the appraised value (of land only, or land appraisal) from what he paid for the property .. that'd be his IRS basis .. result should approximate the contributory value of the improvements, presuming the property was recently purchased ..

 

[Ray Ohler]

Bill,
OK. Lets leave out the possibility that he bought it ten years ago. Say he bought it a year ago or even six months ago. However, he paid cash and didn't have an appraisal done. Maybe bought it "under market". Now, its worth "X". He is gifting it now. He should be able to deduct what it's market value is now. Although I know the IRS is getting tough on people who leave "paper trails", that is why they don't catch the REAL THIEVES. They learned how NOT TO LEAVE PAPER TRAILS. Of course if there is a noticeable differential the appraiser will be on the "hot seat".

 

[Larry Lyke]

pg --

The reason the other appraisers turned down the job is they don't know how to handle it and are afraid of the IRS.

Do a market URAR "As Is" appraisal for the property as if a refi or a sale.

Just be sure to get your repro costs correct so that the accountant can correctly apportion which costs go up in flame and which go down on paper in depreciation.

The cost basis per se has nothing specifically to do with the appraisal per se. That has to do with what he paid for the property back when.

 

[pgerarde]

Thanks to you all for your advise. I did decide to accept the assignment and now feel comfortable about it.

If he had not mentioned all the other apprasiers who would not do it, I probably would not have thought twice about it to begin with...

I have decided to do my URAR along the lines of a refi/sale (and AS IS) with emphasis on the cost approach. I really think that this will work for his purposes.

Again thanks to all of you for your responses.

Patti in Chino Valley

 

[Larry Lyke]

Patti -

You are absolutely right. Always accept assignments on your own competency or willingness to obtain competent support so you can learn something new.

We didn't all arrive at our appraisal desk with full-, self-contained-knowledge, either.