Blog Layout

Commercial Real Estate: 5 Things You Must Know About IRS Real Estate Appraisals

Real Estate Matrix
If you ever find your reputation is on the line for your client's property valuation, things could get complicated. 

Here are 5 critical points to consider when you have a client in need of a real estate appraisal: 

1. The criteria for IRS real estate valuations are different than bank valuations.

An appraisal firm experienced in performing appraisals for estate tax purposes is familiar with these differences. When considering an appraiser for estate tax purposes it’s imperative to ask if he or she has experience in preparing appraisals to be used by the IRS.


If an appraisal prepared by an inexperienced appraiser is rejected by the IRS, one may have to order an entirely new appraisal, which can be very costly, especially for commercial real estate appraisals, which can cost thousands of dollars.


Real Estate Matrix appraisers are experienced in the preparation of appraisals for estate tax purposes.

2. Does the appraiser meet the IRS criteria for a qualified appraiser?

A qualified appraiser is an individual who meets certain requirements. The individual must meet certain minimum education and experience requirements; for real property, the appraiser must be licensed or certified for the type of property being appraised in the state in which the property is located; and the individual must regularly prepare appraisals for which he or she is paid.


The individual cannot have been prohibited from practicing before the IRS under section 330(c) of title 31 of the United States Code at any time during the 3-year period ending on the date of the appraisal, and the individual cannot be an excluded individual.

3. The IRS has its own specific definition of Fair Market Value.

Appraisals performed regarding federally related transactions for federally regulated lending institutions must be based on the definition of market value required by the Interagency Appraisal Guidelines; whereas, appraisals performed regarding estate taxes must be based on the specific definition required by the IRS.


The IRS may reject an appraisal which does not use its specific definition, and the appraiser may be subject to substantial penalties if the appraisal is rejected.

4. The Intended Users for appraisals prepared for IRS use are different from the Intended Users for appraisal reports used by regulated financial institutions.

While the intended user for appraisals completed for federally regulated lending institutions is usually the lender; appraisals for estate tax purposes must name the IRS as an intended user; and typically, there are additional intended users such as the accountants who prepare the tax returns.

5. IRS has specific content requirements for a qualified appraisal.

A qualified appraisal is a document that is created, signed and dated by a qualified appraiser in accordance with generally accepted appraisal standards; relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property; does not involve a prohibited appraisal fee; includes certain required information; and meets the requirements set forth by the Internal Revenue Service (IRS).


You can download this article as a PDF so you can have it with you wherever you go:

Download PDF

Let’s Partner to Make Your Firm More Profitable

When the need arises for a commercial property appraisal there is no need to send your client elsewhere.


All you need is a partner in the process. This is where we come in.


Real Estate Matrix appraisers meet the qualifying criteria and are experienced in performing IRS real estate

evaluations.



No matter what the property size REM can provide real estate valuations so you don’t have to send your clients elsewhere.


Having a reliable resource for real estate valuations will:


• Help you to retain clients

• Expand your services

• Grow your revenue


What if you require an appraiser outside our practice area? We have connections throughout the country and will be happy to assist you in finding the right appraiser to fit your needs.

Real Estate Matrix is one of the Southeast’s premier commercial valuation firms and has participated in the valuation of billions of dollars in real property assets.

We would appreciate the opportunity to add you to our very long list of pleased clients. You can give us a call or click here to fill out our Free Quote Appraisal Form.

Share

Read More of Our Blog

Commercial Appraisal Birmingham AL
By Tammy Bridges 20 Mar, 2024
Commercial Appraisal Birmingham AL: By understanding the process and working together collaboratively, landlords and tenants can navigate commercial tenant buyouts successfully.
Commercial Appraisal Birmingham AL
By Tammy Bridges 14 Feb, 2024
Commercial Appraisal Birmingham AL: Traditional office setups are giving way to more dynamic and adaptable spaces and is transforming the commercial real estate industry.
Commercial Appraisal Birmingham AL
By Tammy Bridges 11 Jan, 2024
Commercial Appraisal Birmingham AL: Determining the value of a commercial property can be a complex process. Here, we will determine 11 factors that will help you in your commercial real estate journey.
Commercial Appraisal Birmingham AL:
By Tammy Bridges 18 Dec, 2023
Commercial Appraisal Birmingham AL: A business valuation is a valuation by a qualified or accredited appraiser of the equity ownership of a business.
Commercial Real Estate Appraisal birmingham AL
By Tammy Bridges 22 Nov, 2023
Commercial Real Estate Appraisal Birmingham AL: When determining commercial property value, you should be prepared to take into account the difference between real property and business personal property.
Commercial Real Estate
By Tammy Bridges 02 Nov, 2023
Commercial Real Estate: Retrospective appraisals are usually used for purposes related to taxation, litigation, and estate planning.
Show More
Share by: