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Tax Planning for Investors: When to Bring in an Appraiser (Not Just Your CPA)
Most real estate investors rely heavily on their CPA during tax season — and for good reason. Your accountant keeps you compliant, advises on deductions, and structures your filings for maximum efficiency.
But there’s one area where even the best CPAs defer to another expert: property valuation.
Because when your tax plan involves gifting, estate transfers, cost basis, or capital gains calculations, the IRS doesn’t just want numbers — they want documentation. That’s where a professional appraisal comes in.
Used correctly, an appraisal doesn’t just tell you what a property is worth. It becomes a tool to support your strategy, protect your filings, and reduce your audit exposure.
Let’s break down how.
Gifting and estate planning require defensible valuations.
If you’re gifting property to family members, transferring ownership within a trust, or passing assets through an estate, the IRS expects that transfer to reflect fair market value.
You can’t guess. You can’t round. And you can’t rely on a casual “what it’s probably worth today” conversation.
The IRS requires that these valuations be:
- As of a specific date (often a past date, such as the date of gift or death)
- Performed by a qualified appraiser using recognized methodology
- Clear, detailed, and supported by market data
A formal appraisal fulfills this requirement — and it becomes part of the permanent file for your tax records. If the value is ever challenged, that report becomes your first and strongest line of defense.
Capital gains calculations hinge on basis. Appraisals help establish it.
When you sell a property, capital gains are calculated based on the difference between sale price and your basis (typically what you paid, plus improvements).
But for inherited property, or gifts received years ago, the basis isn’t always clear. In those cases, an appraisal can be used to:
- Establish step-up in basis for inherited assets
- Support fair market value for gifted interests
- Document cost basis for long-held or transferred properties
We’ve worked with many clients and advisors to provide retrospective valuations — appraisals that reflect value as of a past date. These aren’t guesses. They’re researched, documented, and tailored to tax reporting standards.
Cost segregation studies need a reliable foundation.
If you're using cost segregation to accelerate depreciation (common for multifamily and commercial assets), the IRS often expects to see a strong basis for the property’s total value — especially if there are land vs. improvement allocations.
A detailed appraisal provides that foundation. It gives your cost seg team or accountant the numbers they need to perform the study and properly allocate depreciation schedules.
Without it, you’re relying on assumptions — and that introduces risk.
Planning a charitable contribution or conservation easement? You’ll definitely need an appraisal.
If you're donating real property — or a partial interest — to a nonprofit or placing it under a conservation easement, the IRS requires a qualified appraisal for tax deduction purposes.
And not just any appraisal.
The requirements are strict:
- Must be prepared by a qualified appraiser
- Must meet specific timing and reporting guidelines
- Must include a full narrative explaining how the value was determined
- Must attach IRS Form 8283 (with appraiser’s signature)
These appraisals are scrutinized carefully, especially in high-value donations. Getting it wrong can void the deduction entirely. Getting it right provides significant tax advantages and full audit protection.
Don’t wait until filing season. Bring in an appraiser early.
Many investors think of appraisers only when a lender asks for one. But if you’re doing any of the following:
- Transferring or gifting property
- Preparing for an estate transition
- Selling a long-held asset
- Making charitable contributions
- Documenting partnership buyouts or reallocation
- Filing with adjusted basis from inherited or gifted assets
… it’s time to bring an appraiser into the conversation. Not later. Now.
At Bernhardt Appraisal, we work closely with CPAs, estate attorneys, and fiduciaries to deliver compliant, defensible reports that support smart planning and long-term protection.
Because in real estate, the best tax moves are only as strong as the documentation behind them.
