A gift of a house, a share of a house, or another residential real property interest can create a valuation question for IRS Form 709. The appraisal must address the property interest actually transferred, the date of that transfer, and the reporting instructions supplied by the donor's attorney or accountant.
Eagle Home Appraisal prepares Non-Lending residential appraisals for homeowners, attorneys, and accountants. We provide the real property value and supporting market analysis. We do not decide whether Form 709 must be filed, calculate gift tax, select an exclusion or election, or determine the legal effect of a deed or trust.
We do not use the standard 1004 lending form for gift tax work. The report is built around the tax-reporting purpose, effective date, intended users, property interest, and evidence required for the assignment.
Gift tax appraisal, defined: An appraisal of a specified residential real property interest as of the date supplied for a gift-tax reporting assignment. It is not a calculation of the donor's tax or the recipient's basis.
What Form 709 asks the reporting team to establish
The IRS Instructions for Form 709 explain that gifts are reported by calendar year and that the value of a gift is generally its fair market value on the date the gift is made. The instructions also address adequate disclosure and supporting valuation information.
For real property, the reporting team should identify:
- The date the gift was completed for reporting purposes.
- The residential property and ownership interest transferred.
- The donor and recipient.
- Any consideration connected to the transfer.
- Whether the transfer was made directly or through a trust.
- The filing year and attachment instructions.
- The value standard and report scope requested by the tax professional.
The appraiser needs those instructions before choosing data or developing the report. A whole-property value is not automatically the same question as the value of a partial interest.
The transferred interest controls the assignment
The first practical question is not simply, "What is the house worth?" It is, "What residential real property interest was transferred, and on what date?"
Examples include:
- The entire ownership interest in a residence.
- One owner's stated interest in jointly held property.
- A defined interest transferred into or out of a trust.
- A partial or fractional interest described by counsel.
The attorney identifies the legal rights created by the transfer. The appraiser determines whether the defined interest can be valued competently and what information the assignment requires. If a fractional-interest analysis is requested, it must be identified at engagement rather than added after a standard whole-property appraisal is complete.
Fair market value needs property-specific evidence
The Form 709 instructions discuss real property value through actual arm's-length transactions and, when no suitable transaction exists, comparable sales. That work requires more than an online estimate.
The appraisal may analyze:
- The property's location, site, improvements, condition, and relevant features.
- Sales close enough to the valuation date to reflect that market.
- Differences in size, condition, location, amenities, and transaction terms.
- Market conditions affecting buyers and sellers on the effective date.
- The property interest and assumptions defined in the engagement.
The conclusion must follow the evidence. Eagle Home Appraisal is paid for independent professional work, not for reaching a requested value.
A Form 709 appraisal is not automatically a charitable appraisal
Form 709 concerns gifts and generation-skipping transfers. IRS Publication 561 and Form 8283 address noncash charitable-contribution substantiation. The terms overlap in some tax materials, but the assignments should not be treated as interchangeable.
The current Form 709 instructions describe adequate disclosure as including either a qualified appraisal or a detailed description of the method used to determine fair market value, subject to the applicable regulations. They also state that any appraisal used to determine the value of real estate or other property should be attached.
Eagle Home Appraisal provides Qualified Appraisals for IRS purposes. George "Chip" Holmes and Kristen N. Aste are qualified appraisers who deliver them. The donor's tax professional should identify which federal definition and disclosure requirements apply to the actual transfer.
For the distinction among Form 706, Form 709, and Publication 561, read Real Property Appraisals for IRS Forms 706 and 709.
What to provide before the appraisal begins
Useful records include:
- Property address and assessor parcel number.
- Gift or transfer date supplied by the attorney or accountant.
- Deed, trust excerpt, or transfer document defining the interest.
- Written Form 709 and attachment instructions.
- Prior listings, photographs, plans, permits, or repair records.
- Dates and descriptions of additions, remodeling, damage, or deferred maintenance.
- Access information and a knowledgeable property contact.
- Any agreement or transaction document connected to the transfer.
- Filing deadline and the name of the return preparer.
Do not wait until the return is ready to identify the property interest or valuation date. Those facts control the appraisal research.
Inspection scope fits the gift assignment
The scope may require a full interior inspection, an exterior-only inspection, or in some cases a records-and-photos analysis when reliable current photos exist, such as a recent listing. The appraiser decides whether the available evidence is sufficient for a credible result.
If the gift date is in the past, current condition cannot simply be projected backward. The appraiser also needs historical evidence showing the property as it existed on the effective date.
Our four working phases
1. Consultation
We identify the intended use, intended users, gift date, property interest, reporting instructions, access, and deadline.
2. Research
We collect property records, transfer information, historical evidence when needed, and market data from the relevant period.
3. Market analysis
We compare the subject with relevant residential sales, analyze market-recognized differences, and reconcile the evidence for the defined interest.
4. Delivery
We provide a competent, credible, and reliable USPAP-compliant report for the stated assignment and answer appraisal-methodology questions from the identified client or intended users.
Frequently asked questions
Does giving a house always require Form 709?
The return requirement depends on the transfer and current tax rules. Ask the donor's accountant or attorney. The appraiser does not decide whether a return is required.
Is the recipient's basis always the appraised value on the gift date?
No. Gift basis rules are not the same as valuation for gift-tax reporting. The recipient should ask a tax professional to determine basis and later gain or loss.
Can the appraisal be completed after the gift was made?
Possibly. A retrospective assignment requires enough evidence about the property and market on the gift date. Provide the date, transfer documents, historical records, and deadline for review.
Can one appraisal cover several gifted properties?
Each residential property and ownership interest requires its own scope and supported analysis. Multiple assignments can be coordinated, but one value cannot stand in for separate properties.
Does Eagle Home Appraisal prepare the Form 709?
No. The return preparer handles the form and tax treatment. Eagle provides the residential real property appraisal and requested appraisal declarations or supporting material within the agreed scope.
Reviewed appraisal information
This professional appraisal content is reviewed by George "Chip" Holmes, State Licensed Residential Appraiser, Nevada license #A.0006387-RES. He has been licensed since December 2005 and appears in the ASC registry under 718720.
Kristen N. Aste is a Nevada Certified Residential Appraiser, license #A.0007406-CR. Eagle Home Appraisal focuses on Non-Lending residential work and prepares competent, credible, and reliable appraisal reports in compliance with USPAP.
Discuss a gift tax appraisal
Call Eagle Home Appraisal at (702) 920-4500 or send the assignment details. Include the property address, gift date, property interest, return preparer, available records, access contact, and filing deadline.
For related estate and trust work, visit Estate and Trust Appraisals. For the full residential service category, visit Real Estate Appraiser in Las Vegas.