Land Appraisal for Charitable Donation

[livingthedream1]

I have a non-lending client, an individual, who has inherited a parcel of land that is Undevelopable and wants to donate it to the town for an IRS deduction on his taxes.
I am a Certified Residential appraiser with 23 years experience but has never had this type of assignment.
Can I perform this appraisal? If so, and if there is no sales activity of similar plots of land in the town or adjacent/nearby towns, what are my options for estimating value for this type of assignment?
Any comments would be appreciated.

 

[TerryRohrer]

First, be careful. This type of assignment puts you in the IRS's crosshairs along with the owner.

If you find nothing locally, you can look anywhere for unbuildable tracts (terrian, flood, etc) and compare those to buildable tracts in their area to develop a discount percentage that can be applied to local to your subject, buildable comps. Some will argue (often just for the sake of arguing), but I don't feel bound by any time or geographic restrictions when looking for such data. Toward that end, I could provide you one pair (my own transaction) and know of another.

Again, others will argue, but I don't find transactions where the neighbor purchased the tract to be the best indicator of market value. An adjoining owner is not motivated the same as someone who doesn't stand to gain from the assemblage. Those sales would tend to suggest a lighter discount.

 

[Mark K]

I have a non-lending client, an individual, who has inherited a parcel of land that is Undevelopable and wants to donate it to the town for an IRS deduction on his taxes.

Why is it undevelopable? Why would the Town want it, i.e., what's their purpose and do you know if they want it at all?

Undevelopable...topography too severe, flood plain, zoning restrictions, no utilities and can't get water or no place for septic?

If wanted by the Town, I'm guessing for a park or similar. Around here, undevelopable usually means flood plain and there's plenty of flood plain comps.

Keep in mind that when the owner files his taxes you'll be signing one of his forms with your SSN or TID swearing that you are competent to perform this type of appraisal, Form 8283 IIRC. You might read over Section IV of the form, that's where you acknowledge your competence and liability.

About Form 8283, Noncash Charitable Contributions | Internal Revenue Service

Information about Form 8283, Noncash Charitable Contributions, including recent updates, related forms and instructions on how to file. Form 8283 is used to claim a deduction for a charitable contribution of property or similar items of property, the claimed value of which exceeds $500.

www.irs.gov

Charge accordingly.

 

[Fernando]

For estate appraisals, some would want it higher and some lower value.
How I see it is if near threshold before estate taxes set in, the heir wants the value lower.
If heir plans to sell property soon, higher value helps with step up basis in lowering capital gains.
Or in your case, higher so higher tax deduction.

 

[Dublin ohio]

For estate appraisals, some would want it higher and some lower value.
How I see it is if near threshold before estate taxes set in, the heir wants the value lower.
If heir plans to sell property soon, higher value helps with step up basis in lowering capital gains.
Or in your case, higher so higher tax deduction.

The above should be in your dementia thread

 

[Elliott]

I'd suggest you tell the owner to list and sell it and then give the money to the city.

 

[Tom D]

your foot is touching the bear trap. slowly pull it out, pass go and do not go to jail.

 

[David S]

your foot is touching the bear trap. slowly pull it out, pass go and do not go to jail.

Just curious: Why everyone is so scary about IRS appraisal? Did anyone get real bad case before? What about divorce or property tax appeal assignment? These types of appraisal also involve the government or court review, right? Not so bad as IRS appraisal? Try to understand that.

 

[JTip]

a parcel of land that is Undevelopable

Certified Residential - 1 to 4 Family

DOESN'T INCLUDE: land that cannot be developed

hard pass

 

[Tom D]

Why everyone is so scary about IRS appraisal? What about divorce or property tax appeal assignment? These types of appraisal also involve the government or court review, right? Not so bad as IRS appraisal?

if you read about bad irs appraisals, you would know the difference in the existential threat.