Restricted Reports and Estate Planning

[DanTheAppraizer]

Just curious on this one- we have always done full appraisal reports for this. Is there any acceptable way/dollar limit on performing a restricted use appraisal for estate purposes? All others we have done have been full appraisals on date of death. In light of the Institute eliminating the summary/self contained reports, I was wondering if this had changed since 2015.

 

[Terrel L. Shields]

My understanding is that most tax attorneys think the IRS won't accept them and if they review the filing, they could disallow them.

 

[sputnam]

The developnent, contents and format of a restricted appraisal report are governed by the Intended Use, the Scope of Work, SR 1, SR 2-2(b) and SR -2-3. There is nothing in USPAP about the value of the property. A specific Client may have requirements about that. That would be a question for the Client.

 

[Terrel L. Shields]

In light of the Institute eliminating the summary/self contained reports

Actually the Appraisal Foundation writes USPAP, the Appraisal Institute has no direct say in that.

 

[Mark K]

I think a lot would depend on the type and $ value of the property.

Basic SFR in avg. price range, if you want to state a lot things instead of discussing/summarizing them, I don't see a problem. I have a brief narrative format that is less than a full report but a bit more than a restricted report that I often use for estate purposes. I title it a restricted report but in reality, its more than that. I state the intended use/user, client, purpose, zoning, HBU, market conditions (recent appreciation, # of listings, DOM, etc.), and a few other things. I then use a qualitative approach for the comps (in a table, not in a grid) and summarize and reconcile. Never been questioned. Its usually about 5-7 pages plus photos and addenda.

However, if its a McMansion on 40 acres, small commercial, large ag, etc. I don't think a restricted report would be appropriate. That's where the appraiser needs to determine the appropriate scope.

 

[BRCJR]

If a credible result is presented the report format is a client issue. Restricted Appraisals may be completed on any type property and have more than one Intended User, so long as properly identified.

 

[The Warrior Monk]

My understanding is that most tax attorneys think the IRS won't accept them and if they review the filing, they could disallow them.

That's the issue. While they client may on need "a number," they also need to consider that they may be audited. A restricted use report is likely not going to suffice for auditing purposes.

I have been involved in appraisals for tax considerations, but they have involved preliminary valuations for making decisions pertaining to actions that have tax consequences; e.g., to transfer a home into a trust or sell the property. Once they decided on the course of action, they then will order a second appraisal appropriate to the intended use.

 

[tg4423]

I think a lot would depend on the type and $ value of the property.

Basic SFR in avg. price range, if you want to state a lot things instead of discussing/summarizing them, I don't see a problem. I have a brief narrative format that is less than a full report but a bit more than a restricted report that I often use for estate purposes. I title it a restricted report but in reality, its more than that. I state the intended use/user, client, purpose, zoning, HBU, market conditions (recent appreciation, # of listings, DOM, etc.), and a few other things. I then use a qualitative approach for the comps (in a table, not in a grid) and summarize and reconcile. Never been questioned. Its usually about 5-7 pages plus photos and addenda.

However, if its a McMansion on 40 acres, small commercial, large ag, etc. I don't think a restricted report would be appropriate. That's where the appraiser needs to determine the appropriate scope.

Would you be willing to show a sample of your table?

 

[Terrel L. Shields]

title it a restricted report but in reality, its more than that. I state the intended use/user, client, purpose, zoning, HBU, market conditions (recent appreciation, # of listings, DOM, etc.), and a few other things. I then use a qualitative approach for the comps (in a table, not in a grid) and summarize and reconcile. Never been questioned. Its usually about 5-7 pages plus photos and addenda.

Interesting. My Restricted reports are generally for annual reports I do (I have 1 in Jan. and 1 in June) but my approaches are fully fleshed out. So my approaches alone are likely to have 10 or more pages, my addenda probably 4 or 5 and the Summary/Certs about 3.

 

[Don Jones]

My understanding is that most tax attorneys think the IRS won't accept them and if they review the filing, they could disallow them.

Terrel, I just returned from a continuing education class where a review appraiser with the IRS in St. Louis was attending. This very question came up. The IRS review appraiser said restricted reports were not acceptable to IRS.