(732) 690-4650
DK REAL ESTATE APPRAISAL INC.
Certified Residential Real Estate Appraiser
Determining Fair Market Value for Estate Taxes
ESTATE VALUATION
When someone dies, it is necessary to value all of the decedent’s assets, including real property such as real estate. A date of death valuation determines the Fair Market Value of real estate as of the date that the owner died. This property valuation is used to determine if a federal estate tax return is due to the IRS, and the amount of estate tax, if one is owed. This is part of what is sometimes referred to as thedeath tax. The valuation of the property is also used to determine the new income tax basis for the decedent’s assets when they are passed on to the person’s heirs.
Settling an estate usually requires an appraisal to establish Fair Market Value for the residential property involved. Often, the date of death differs from the date the appraisal is requested. We are familiar with the procedures and requirements necessary to perform a retroactive appraisal with an effective date and Fair Market Value estimate matching the date of death. The ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP) binds us with confidentiality, ensuring the fullest degree of discretion.
These situations are usually stressful and complex, and must be handled carefully and with practices that will hold up in court, i.e., are defensible.
WHAT IS FAIR MARKET VALUE OF REAL PROPERTY OF AN ESTATE?
IRS definition:
“The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.”
Regulation §20.2031-1.
(You should always consult a tax attorney for complete information on the legal and tax implications of the valuation of assets at death. Although an alternative date may be used for a date of death valuation of assets in some circumstances, the selection and rules governing an alternate date are complicated. You should order the appraisal after you have consulted with your attorney.)
HISTORICAL APPRAISALS
A date of death valuation requires an historical appraisal, also known as a retrospective appraisal.
This type of appraisal determines the Fair Market Value of property as of a specific date in the past. Attorneys, accountants and executors and others rely on our appraisal services to help in the valuation of assets at death because of the familiarity and experience we have in performing residential real estate appraisals of this sensitive type.
WHO CAN ACT AS AN ESTATE TAX APPRAISER?
The IRS has defined the appraisal standards that must be met along with verifiable minimum education, designation and experience requirements for an appraiser performing appraisals for estate tax purposes. The estate tax appraiser must have experience with IRS Real Property Valuation Guidelines. Treasury Regulation Section 20.2031-1(b) requires the residential appraiser to follow the valuation guidelines when preparing a real estate appraisal for tax purposes or retrospective date of death valuations. In addition, the real estate appraiser should be designated and qualified under IRS tax regulations Section 1.170A-17(a).
PROFESSIONALS
We Recommend
PAMELA AVRAHAM, CPA, RG, CFE
Urbach & Avraham, CPAs, LLP
1581 Route 27, Suite 201
Edison, NJ 08817
Phone: 732-777-1158
Fax: 732-777-1161
GABRIELLE L. STRICH, ESQ.
Attorney
Strich Law Firm, P.C.
2650 US Highway 130, Suite G
Cranbury, NJ 08512
Phone. 609 924-2900
MICHAEL V DOWGIN, ESQ.
Attorney
2413 Us Highway 130
Dayton NJ 08810
Phone: 732 274-2110