A spike in appraisal activity occurred around the last quarter of 2012 much of which was for the estate planning and/or property gifting scenarios mentioned above. The main reason behind this flurry of appraisal activity had to do with the fiscal cliff and the looming adjustment to the estate tax laws. Many property owners needed current valuations of their assets to help plan and make appropriate arrangements in light of the potential change in the laws and tax rates that were being anticipated. Although the final result of the fiscal cliff negotiations resulted in very limited changes to the estate tax, having a current accurate appraisal of property for long-term family estate planning is prudent a decision.
Appraisals can be utilized in estate planning a number of different ways. Many times intrafamily transfers of either minority or majority ownership in property is necessary and knowing the current market value helps everyone involved feel comfortable that the value associated with the transfer is accurate. Additionally, a variety of tax strategies and planning can be accomplished in advance of major family changes and having an up to date appraisal when plans are being put in place helps in the planning and structuring process. Gifting property to heirs and/or charitable organizations is another instance when having a qualified appraiser perform a current market appraisal of your property is a good idea.
Anytime an appraisal is needed by a property owner or family estate, only a highly qualified appraiser should be hired, but it should also be noted that for many issues surrounding estate planning, gifting, charitable donation, and any number of other reasons that the IRS requires an appraisal, the appraiser selected must meet IRS requirements as a "Qualified Appraiser" (See IRS Publication 561 for complete details). A brief description from the IRS website states that a Qualified Appraiser is an individual who meets all the following requirements:
The individual either:
- Has earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or
- Has met 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. For property other than real property, the appraiser must have successfully completed college or professional-level coursework relevant to the property being valued, must have at least 2 years of experience in the trade or business of buying, selling, or valuing the type of property being valued, and must fully describe in the appraisal his or her qualifying education and experience.
- The individual regularly prepares appraisals for which he or she is paid.
- The individual demonstrates verifiable education and experience in valuing the type of property being appraised. To do this, the appraiser can make a declaration in the appraisal that, because of his or her background, experience, education, and membership in professional associations, he or she is qualified to make appraisals of the type of property being valued.
- The individual has not 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.
- The individual is not an excluded individual.
For the highest qualified appraisers select a MAI Designated Member of the Appraisal Institute.
Mike Cliggitt, MAI, MRICS
Cliggitt Valuation, Inc.
Commercial Real Estate Analysts and Advisors
Central Florida Real Estate Valuation Firm
Available in Lakeland, Auburndale, Lake Alfred, Winter Haven and numerous other cities
863-661-1165
www.cliggitt.com
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