Transferring real estate as a gift can be a meaningful way to support family members or advance estate planning goals. But when property changes hands as a gift, it isn’t just a personal matter—it also comes with tax implications. That’s where Gift Tax Appraisals come in.
What Is a Gift Tax Appraisal?
When a property owner gifts real estate to another person—such as a child, family member, or trust—the IRS requires the property’s fair market value (FMV) to be established as of the date of the gift. This valuation determines whether the gift falls within annual or lifetime gift tax exemption limits and helps ensure accurate tax reporting.
Why Gift Tax Appraisals Matter
The IRS uses the appraised value to calculate potential gift taxes owed.
An accurate appraisal provides critical documentation in case of an IRS audit or review.
It protects both the donor (giver) and the recipient from disputes about the property’s value.
Common Situations Requiring Gift Tax Appraisals
Gifting Property to Children or Heirs
Parents transferring a home, vacation property, or rental real estate to their children.Partial Interest Transfers
When only part of a property is gifted—for example, 50% ownership in a duplex. These cases may involve discounts for lack of marketability or lack of control.Trust Planning
Transferring real estate into an irrevocable trust counts as a gift and requires valuation—often as part of advanced estate planning.Fractional Gifts Over Time
Families sometimes transfer small percentages of real estate each year to take advantage of annual exclusions without exceeding thresholds. Each transfer typically requires an appraisal.Commercial or Investment Properties
Gifting interests in commercial real estate, rental portfolios, or development land requires specialized valuation expertise.
Key Elements of a Gift Tax Appraisal
Date-Specific Valuation – The value must reflect FMV on the exact date of the gift.
USPAP & IRS Compliance – Appraisals must meet both Uniform Standards of Professional Appraisal Practice and IRS standards to be defensible.
Detailed Reporting – Reports are often longer and more comprehensive than a typical mortgage appraisal to withstand IRS scrutiny.
Professional Coordination – Typically ordered in collaboration with attorneys or CPAs to ensure correct tax filings.
Why Professionalism Matters
Gift tax appraisals can be audited years down the road, especially when tied to estate planning or large family wealth transfers. An accurate, well-documented, and defensible appraisal safeguards clients from unexpected penalties, additional taxes, or disputes with the IRS.
At OnPoint Appraisals, our team provides reliable, compliant valuations designed to hold up under IRS review. Whether you’re gifting a family home, partial ownership, or commercial property, we deliver the clarity and confidence you need for smooth, compliant transfers.