Question about Getting Appraisal to figure out Step Up Basis for tax return

[tmoorehe]

Hello,
I recently discovered that we were supposed to have a home appraisal done, near the date my relative passed, to estimate step up basis for the trust's tax return. We sold the home already (9mos after family member passed) to a non-family member. And now it's 14 months since my relative died. Is it possible to get a retrospective appraisal on a house that we no longer own? Will that be acceptable to IRS? If so, how much should I expect to pay for the appraisal? The home was in san francisco. Thanks in advance for the guidance.

 

[Fernando]

I'm surprise no one (agent or CPA) told you that you needed a retrospective appraisal on date family member passed away.
I'd never done a retrospective appraisal in your situation.
I would look at the home at effective date and assume condition (unless recent updates or current owner tell me otherwise) was same as date of passing away.
Each appraiser is different, but I like to look inside. If current owner is accommodating that would be great.
Otherwise talk with an appraiser who is willing to do the appraisal without going inside the property.

 

[sputnam]

Yes. You can get a retrospective appraisal on the property. If you can persuade the new owners to allow an interior inspection, the appraiser will be able to produce a more reliable appraisal. If not, an appraisal can still be done.

 

[tmoorehe]

Thank you both for your response. CPA just told me we'd be able to take step up basis, but not that there was a formal appraisal to do it and real estate agent told me that I didn't need to do it, the buyer would. It didn't occur to me that neither of them were fully or accurately advising me. I guess this sort of stuff happens sometimes. That said, I'm in a pickle, but sounds like it can be solved.

Can you give me an estimate or range for what I can expect to pay to have this retrospective done in san francisco AND how long does it typically take to get an appraisal completed? Thanks again.

 

[jay trotta]

Thank you both for your response. CPA just told me we'd be able to take step up basis, but not that there was a formal appraisal to do it and real estate agent told me that I didn't need to do it, the buyer would. It didn't occur to me that neither of them were fully or accurately advising me. I guess this sort of stuff happens sometimes. That said, I'm in a pickle, but sounds like it can be solved.

Can you give me an estimate or range for what I can expect to pay to have this retrospective done in san francisco AND how long does it typically take to get an appraisal completed? Thanks again.

You will need some input from someone in the San Francisco area to quote a possible Fee & Turn Time, hopefully someone from (here-the forum) that is in that area can provide you with that information.

 

[Elliott]

Who is the executor or personal representative for the estate? I'd suggest consulting a lawyer or CPA to understand the process. I've gone though a few estates and basically heirs get a stepped up basis based on the value at death or six months after death, so those are your two potential valuation dates (and for all other valuations).

The basis valuation will be used to establish the long/short term capital gain for heirs' income tax purposes, and it sounds like it would be minimal, but its one of those things its best to get right. But you likely need a real estate appraisal based on a date in the past. The cost to see an estate attorney or CPA to get good advice shouldn't be significant. Appraisers are only qualified to estimate the market value of the property at a specific date and not qualified to give tax advice.

 

[Mark K]

I can't speak to the exact fee amount (except that I personally charge about 1.5X typical mortgage appraisal amount) but have done a lot of retrospective reports, no big deal. Recent one needed three dates (three reports). Current date, 2015, and 1998. That fee was about 4X typical mortgage fee.

Some lawyers and CPA's will say a broker opinion is sufficient but most I work for want a licensed appraiser to sign off just in case things get ugly down the road. And they often do.

 

[tmoorehe]

Thanks everyone for the additional information. Happy holidays.

 

[Terrel L. Shields]

A retro report is doable. The oldest one I've ever done was 1969, which I did some 30 years later. That is very difficult. But a retro in the past 5 years is generally as easy as if today. You might pay a small premium over a current report. You also need to make sure the appraiser does NOT use lending forms. The IRS has an explicit "Fair Market Value" definition. Also, your tax attorney and or CPA should be giving you guidance and they should know an appraiser who does those kinds of reports.

Most such reports are never reviewed by the IRS, they are simply a support in the event the IRS was to audit same. I do a lot of those in the course of my business and they are typically the best job out their in terms of ease of doing and liability. In 30 years, I've never been audited by the IRS over it.

 

[Zoe]

Thank you both for your response. CPA just told me we'd be able to take step up basis, but not that there was a formal appraisal to do it and real estate agent told me that I didn't need to do it, the buyer would. It didn't occur to me that neither of them were fully or accurately advising me. I guess this sort of stuff happens sometimes. That said, I'm in a pickle, but sounds like it can be solved.

Can you give me an estimate or range for what I can expect to pay to have this retrospective done in san francisco AND how long does it typically take to get an appraisal completed? Thanks again.

I can't give you estimate on appraisal price on retrospective. You can get bids from several qualified appraisers. They need a a few years of experience and a license to perform the appraisal for IRS..

All the other tax situations are IRS or CPA questions you should ask.