If real estate is transferred as a gift, the appraisal is not just a number for a form. It is the valuation evidence that helps the donor, CPA, and attorney explain how fair market value was determined.
This Part 2 focuses on what an IRS gift tax appraisal should support, what information belongs with Form 709, and why a short automated estimate is not a substitute for a defensible appraisal.
The IRS states that a gift generally is adequately disclosed when the return or attached statement includes a full and complete Form 709, a description of the transferred property and any consideration received, the identity and relationship of the donor and donee, trust information when applicable, and either a qualified appraisal or a detailed explanation of the valuation method.
Adequate disclosure matters because it helps start the limitations period for the reported gift. Your CPA or attorney should decide how the return is prepared and what must be attached. The appraiser’s job is to develop and explain a credible opinion of fair market value as of the effective date.
Gift tax valuation is date specific. The appraiser is not estimating what the property could sell for today unless today is the date of the gift. A transfer completed months or years ago may require a retrospective appraisal using market data that was known or reasonably available as of that earlier date.
This distinction can change the comparable sales, market conditions, and final opinion of value. It is one reason the deed, settlement documents, trust documents, and exact transfer date should be provided before the appraisal begins.
The official Form 709 instructions say that an appraisal used to determine the value of real estate or other property should be attached. If the appraisal is not attached, Schedule A must include a full explanation of how value was determined. The return itself is prepared by the taxpayer and tax professional, not the real estate appraiser.
Practical answer: coordinate the assignment with the CPA or attorney before filing. Confirm the effective date, interest being transferred, intended user, and whether the complete appraisal will be attached to the return.
These forms solve different problems. Form 709 is generally used for federal gift and generation-skipping transfer tax reporting. Form 8283 is associated with noncash charitable contribution deductions. A family gift, transfer to a trust, or below-market transfer should not automatically be treated like a charitable donation assignment.
Tell the appraiser exactly what transaction occurred and which tax professional is coordinating the filing. That prevents the wrong scope of work, wrong effective date, or wrong report language.
An automated estimate may be a useful screening tool, but it does not inspect the property, verify condition, select the correct ownership interest, explain adjustments, or certify an opinion of value. A broker price opinion can help with listing strategy, but a tax filing may require independent appraisal evidence with a documented scope of work.
Complex Northern Virginia and Washington DC properties are especially sensitive to school boundaries, lot utility, renovation quality, accessory spaces, traffic influence, view, condition, and submarket differences. Two nearby homes can have materially different values.
A defensible appraisal explains the reasoning. The report should connect the property facts, market evidence, comparable sales, adjustments, and reconciliation to the final opinion of value. It should also disclose important limitations instead of hiding uncertainty behind a single number.
The strongest report is not always the highest or lowest value. It is the value conclusion that can be followed, tested, and supported by the available market evidence.
Michael T. Giampa is a Certified Residential Real Estate Appraiser with 34 years of experience and more than 15,000 completed appraisals. DC Metro Appraisals serves Fairfax, Arlington, Loudoun, Prince William, Alexandria, Falls Church, and Washington DC.
Virginia appraiser license 4001003997. Virginia appraisal business license 4008002207. District of Columbia license CR11824.
Call or text 703-350-2542 or email mike.g@dcmetroappraisals.com to discuss the property, effective date, and intended use before ordering.
Review credentials and licenses or learn more about Michael T. Giampa.
Review the current IRS Instructions for Form 709 and coordinate all filing decisions with a qualified tax professional.
This article is general appraisal information, not tax or legal advice. Tax forms, thresholds, and filing rules can change.
