Appraisal for tax purposes-IRS

[Phil Dwyer]

Hello all,

I was contacted today by a homeowner, to complete an appraisal of her single family residential property. She told me the purpose of appraisal would be for tax purposes. Her non-profit charity organization is the owner of public record.

I have not completed an assigment for this purpose. What is involved? Do I need to look up IRS appraisal guidelines? Should I be contacting her accountant or one of my own?

Thanks for any help or suggestions in advance!

 

[Midwest Guy]

This should do it!

http://www.irs.gov/pub/irs-pdf/p561.pdf

 

[Carnivore]

Phil,

Dont use the 1004.

Make sure you use the IRS definition of value wording.

Just a plain jane USPAP compliant report.

Good to see others getting non-lender work. Keep it up! Lets make appraisers be in short supply to the lenders! Lets make lenders compete with other users of appraisal services.

 

[Colorado Guy]

Be sure to read publication 561 closely - it requires information about the comparables not normally found in an appraisal - like assessed values, tax values, etc.

Also note you will need to provide an IRS Form 8283 and complete the appropriate section.

 

[wickedness1]

Does anyone know of any good courses regarding the new IRS laws requiring appraisals?

Anywhere is fine, just would like a reputable school.

 

[ken351]

This should do it!

http://www.irs.gov/pub/irs-pdf/p561.pdf

Thank you Jim, This is a great publication and very detailed.

 

[Louis Pompeo]

She told me the purpose of appraisal would be for tax purposes. Her non-profit charity organization is the owner of public record.

You must ask her what is the particular issue or reason for the appraisal. At first blush, it sounds to me that the IRS is considering whether there is "inurement" due to her living in a house owned by her non-profit. (benefiting from the non-profit status)

Secondly, contrary to prior posts, you can and should use a simple FNMA type report for a non-complex residential property. The IRS likes it simple and comprehensive.

Next, make sure you use the IRS definition of Market Value, which should be included in the prior hyperlink. If not, Google it.

Lastly, an 8283 form is only good in relation to a non-cash charitable contribution, such as a donation of a conservation easement. It has to be signed by the donor, donee, and the appraiser. I don't think this is what you have. If you use it and it is not necessary, you may do more harm than good.

In conclusion, when doing an appraisal for the IRS, you should always have a letter of engagement that you prepare AFTER you have had a thorough conversation with the taxpayers tax-advisor. Make sure you cover yourself for post appraisal interviews via phone and in-person at the IRS office.

 

[Marcia Langley]

Secondly, contrary to prior posts, you can and should use a simple FNMA type report for a non-complex residential property. The IRS likes it simple and comprehensive.

Pat,

I'm not sure you unerstand the significance of this.

The advice was to not use the Fannie Mae form because it is for lending only and has a pre-printed definition of market value on it as well as some other problems.

You said a "simple FNMA type" form so I assume you only meant to use a simple form and a summary format as opposed to a narrative or a lengthy or near-self-contained format. I'd agree with you there.

Not to be overly picky but the Fannie Mae forms themselvs would be grossly inappropriate. A simple general purpose form would be best.

 

[Louis Pompeo]

Pat,

I'm not sure you unerstand the significance of this.

The advice was to not use the Fannie Mae form because it is for lending only and has a pre-printed definition of market value on it as well as some other problems.

You said a "simple FNMA type" form so I assume you only meant to use a simple form and a summary format as opposed to a narrative or a lengthy or near-self-contained format. I'd agree with you there.

Not to be overly picky but the Fannie Mae forms themselvs would be grossly inappropriate. A simple general purpose form would be best.

I was a Lead Review Appraiser at IRS for 5 years up to last year. I am in contact with IRS appraisers weekly.

On this issue, I think you may want to blow off someone else, Marcia.

 

[Phil Dwyer]

In conclusion, when doing an appraisal for the IRS, you should always have a letter of engagement that you prepare AFTER you have had a thorough conversation with the taxpayers tax-advisor. Make sure you cover yourself for post appraisal interviews via phone and in-person at the IRS office.

This is definately the way to go. However, I've been using the AI shell engagement letter with some revisions. It seems to scare off home owners. Do you think this due to the lengthy nature of the letter, or that the letter is weeding out potential problem clients?