What Is a Qualified Appraisal?

There are lots of reasons to seek out an appraisal: to take stock of your land for estate planning, to help set up a conservation easement, or to simply review the value of your property. But if any of your reasons involve the U.S. Internal Revenue Service (IRS), you will need a special kind of appraisal—a qualified appraisal.

A qualified appraisal must meet certain standards specified by the IRS. It must be conducted by a qualified appraiser, an appraiser who has earned an appraisal designation from a recognized professional appraiser organization or who has obtained a certain level of education and experience as an appraiser. A qualified appraiser must regularly perform appraisals for pay, and must be licensed or certified by the state for the type of property he or she is appraising.

A qualified appraisal must also be conducted according to the principles of the Uniform Standards of Professional Appraisal Practice or “USPAP.” In general, that means it includes at least the following information:

  • A detailed description of the property
  • The name, address and taxpayer identification number of the appraiser
  • The appraiser’s qualifications, including background, experience, education and membership in professional appraisal associations
  • The purpose for which the appraisal was prepared
  • The date on which the property was valued
  • An accounting of the appraiser’s assumptions and conclusions regarding the fair market value of the property   
  • The appraisal method or approach used, along with the specific basis for the valuation (including comps)

If you’re appraising your property to set up a conservation easement and will be claiming a charitable contribution deduction for the value of the easement, the qualified appraisal must also include an analysis of the likelihood that the land would be developed, the potential impact of the uses the easement will permit, and the impact of the conservation easement on the value of the surrounding properties.

If an appraisal is part of your estate planning process, you’ll have to start with finding the right appraiser.

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