Real Estate Appraisal for Gifting Purposes

Appraisal-for-giftingIRR San Diego has completed a commercial appraisal of an apartment property located in the city of Del Mar. The property consists of six separate buildings containing 44 dwelling units. The 39,000 square foot project was built in 1977 and is 98% leased as of the effective appraisal date. Project amenities include a pool and spa as well as a laundry facility. The buildings are located on a 2.37 acre site.

The purpose of this commercial valuation was for gifting purposes. This type of intended use is different from traditional lending purposes as it involves different intended users (such as the Internal Revenue Service) and a different definition of market value.

If you have any needs for a real estate appraisal for gifting purposes, please contact us today at 858-259-4900 or sandiego@irr.com.

2015 Changes to Estate Taxes (and How it Affects Real Estate Appraisals)

IRS-Estate-Tax-Appraisal-San-DiegoAs 2014 comes to an end, it is important to look at what is changing to estate tax requirements in 2015. Here is a summary of estate tax laws, what is to come next year, and how these changes affect the valuation of your real estate.

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Estate Planning Appraisal – Del Mar Medical Office

Estate-Planning-Appraisal-Del-Mar-Medical-Office

Integra Realty Resources – San Diego has completed a commercial appraisal of a medical office property located in Del Mar in San Diego County. The building is approximately 18,300 square feet in size and is located on a 0.84 acre site. As of the effective appraisal date, the property was 84% leased.

The purpose of this commercial valuation was for estate planning purposes, which is one of IRR’s specialty practices. This type of valuation differs from traditional lender assignments in that there are typically different dates of value and a different definition of market value, which if not used may cause the IRS to reject the appraisal. When choosing a commercial real estate appraiser in San Diego, be sure to choose one who is familiar with what is to be included in appraisal reports for estate planning purposes.

How to Save Thousands in Appraisal Fees: The Difference Between Appraisals for Lenders and for the IRS

IRS Estate Tax Appraisal San Diego

In the appraisal of real estate, you are probably most familiar with ones for a bank; you want to refinance or sell a property, and an appraiser contracted by the lender comes out to your property and creates an appraisal report that will be used for lending purposes.

However, an appraisal performed for estate tax, planning, or gifting purposes is slightly different. Here’s how:

Different Definition of Market Value

Appraisals for lending purposes are considered to be a federally related transaction, which means that the Federal Deposit Insurance Corporation (or FDIC) or any regulated institution is involved and that the transaction requires the services of an appraiser. These types of appraisals are done based on a definition of market value found on the FDIC website.

On the other hand, appraisals for estate tax purposes are prepared for the Internal Revenue Service (or IRS), which has a different definition of market value.

While the two are somewhat similar, it is important to know the difference because if an appraisal submitted to the IRS has the wrong definition of value, it may be rejected.

Different Intended Users

The other difference between these two appraisals are the intended users of the report. For appraisals used for federally related transactions, the intended user is primarily the lender. However, appraisals for estate tax purposes need to list the IRS as an intended user. Additionally, there are typically other intended users for these types of appraisals, such as accountants who will be preparing your tax documents.

How to Save Thousands on Appraisal Fees

An appraisal firm that specializes in performing appraisals for estate tax purposes is typically familiar with these differences. When considering an appraiser for your estate needs, it is important to interview them and ask if they have experience with preparing appraisals that go to the IRS. As additional screening, you could also ask what definition of market value they would use and who are typically the intended users for such a report (if they give different answers other than above, it might be beneficial to find another appraiser more experienced with this type of valuation).

In short, make sure you conduct your due diligence before hiring an appraiser. Appraisals (especially commercial real estate appraisals) can cost several thousand dollars, and if an appraisal prepared by someone inexperienced is rejected by the IRS, then you may have to order an entirely new appraisal.

Summary

There are a couple differences between appraisals prepared for lenders and appraisals prepared for the IRS. It is best to use an appraisal firm that knows the difference between the two; otherwise, you could end up paying more than you should. If you have any questions about appraisals for the IRS or the appraisal process, please contact us today.

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