IRS tax appraisals

[Eli Weiss]

My accountant wants me to do an appraisal on a property one his clients received as a gift, for IRS tax purposes, I have read their guidelines in regards to being qualified and competent in the local area, however he wants a simple desktop appraisal, so can a IRS appraisal be done as a desktop or an inspection is needed, they don't seem to dictate you what type of form to use, so I was thinking of going with a GPAR form, but is there a GPAR desktop form and will it be sufficient for an IRS appraisal?

 

[Terrel L. Shields]

No desktop. Do a narrative. I suppose the GP report format would be adequate, but a narrative is better. You will need to fill out the form they provide. That's all the accountant needs. But the report should be thorough because if it isn't the IRS will review and reject it. A summary report is adequate. I would use no less than 2 approaches.

If the accountant objects to the fee, remember. The IRS can make you liable for the tax if you mis-appraise it. Be sure to include a resume that shows you are qualified under the 8283 provisions. Pay particular attention to page 6.

 

[CigarDad]

You did not say what type of property you need to value. I have a good appraiser friend who works at the IRS as an appraiser and he said for the valuation of a single family residence a drive-by appraisal is sufficient.

 

[Eli Weiss]

Terrel, thanks for your response, I haven't done a full narrative appraisal report yet, other then the narrative comments I write up with every report, do you have some type of template for a residential narrative you would use on 2-4 family property?

 

[Eli Weiss]

You did not say what type of property you need to value. I have a good appraiser friend who works at the IRS as an appraiser and he said for the valuation of a single family residence a drive-by appraisal is sufficient.

I have a two family property, I understand a drive-by is sufficient, how about a desktop?

 

[PropertyEconomics]

I think I would advise my client if the appraisal is for gifting purposes, a full inspection would be far superior. To scrimp for a few bucks seems rather nuts to me and the appraisal would be subject to so many extraordinary assumptions, will anyone really know what the true value of the gift is?
Cigar Dad says its allowable, the question I suppose I would ask myself and my client is .. Is a driveby prudent and the best course of action given the intent and true purpose of the report?
And now we find out its a two to four family property. Perhaps a desktop would be sufficient IF you have good access to all of the rent and expense data as well as a history of occupancy. I would surmise the income approach may be the primary approach to value.
Still a few questions to ask, and I remain on the side that a site inspection would be best.

 

[Eli Weiss]

PE, that's what concerns me the "extraordinary assumptions"....but then again you have lenders issuing loans with desktops...

He sure doesn't file my taxes under "extraordinary assumptions" he wants every single expense documented.

 

[Eli Weiss]

Terrel, I send that i8283 PDF to my accountant, he advised me that this is not a
Noncash Charitable Contributions, but a simple gift, so all that does not apply.

 

[Elliott]

Be wary of an accountant who tells you how to do your work.
When you do IRS work its like doing legal work. Its not slap
and dash work. If someone said, "I just need a desktop."
I'd say, "Well, the IRS requirements are beyond a desktop
report, and it would be better done on a full summary report
format with supplemental information that the IRS requires
and it will cost you $X."

 

[PropertyEconomics]

Eli ... search the IRS website ... you will find answers to your questions regarding gifting. The issue you have is that gift taxes will be realized, the IRS will scrutinize the report to be sure in order to estimate the TRUE amount of gift taxes to be paid.
Again Eli .. I would simply tell the client that Id not accept a driveby or a desktop in this instance.
Lenders may do them ... but the IRS carries a much bigger stick ... why even take the chance.
As a side note, Id say the property owner (the giftor) is getting some very poor advice from someone. Penny wise and pound foolish ... which in my mind, does not work well with the IRS.