What is an IRS qualified appraiser and qualified appraisal?
For gift tax purposes, a qualified appraiser regularly appraises or holds out as an appraiser, is qualified for that type of property, and is not the donor, the recipient, a family member or an employee of either. A qualified appraisal must state the dates, purpose, method, reasoning and the specific basis for the value, such as comparable sales.
Where the term comes from
"Qualified appraisal" is not a marketing phrase. For gifts, it comes from Treasury Regulation 301.6501(c)-1(f), the rule that decides whether a gift was adequately disclosed on a gift tax return (Form 709).
That matters because of what happens if it was not. Under the same regulation, if a gift is not adequately disclosed, the IRS can assess gift tax on it at any time. A qualified appraisal attached to the return is one way to satisfy the disclosure rules. The other is a detailed description of the valuation method, with the supporting data. The Form 709 instructions offer the same two choices.
The appraisal does not stand alone. The regulation also asks the return to describe the property and anything the donor received in exchange, and to identify the donor and each recipient and how they are related. The appraisal covers the value. Your CPA covers the rest of the package.
One caution. The IRS uses the same words in other places with different rules. Charitable donations, for example, have their own definitions in Regulation 1.170A-17, which requires an appraisal prepared under the substance and principles of USPAP (the Uniform Standards of Professional Appraisal Practice), verifiable education and experience, and timing rules tied to the date of the contribution. If you are donating a house rather than gifting it to a person, ask your CPA which rule applies.
Who counts as a qualified appraiser for a gift
The gift regulation sets three tests. The appraiser must:
- Be in the business. Hold themselves out to the public as an appraiser, or perform appraisals regularly.
- Know the property type. Be qualified to appraise that kind of property based on background, experience, education and any professional memberships.
- Be independent. Not the donor, not the person receiving the gift, not a family member of either, and not anyone employed by them or their family.
Notice what that rules out. Your sister who is a real estate agent fails twice: she is family, and pricing listings is not the same as appraising. The donor's own bookkeeper fails on the employee test. The donor writing "trust me, it's worth $700,000" fails all three, and gets bonus points for confidence.
The regulation does not mention state licensing. In my view, a state-licensed residential appraiser who does this work regularly is the most direct way to show the property-type test is met for a house, and the license is easy to verify.
Experience with the right kind of assignment matters too. Valuing a house as of a past date, from sales that happened around that date, is a different skill than pricing a listing for next weekend. Ask how often the appraiser does retrospective work for tax filings.
What a qualified appraisal has to contain
The regulation lists what the appraisal itself must include:
| Required item | What it means in plain words |
|---|---|
| Date of transfer, date of appraisal, purpose | When the gift happened, when the report was written, and why |
| Description of the property | What was given, clearly enough to identify it |
| Description of the appraisal process | How the appraiser went about it |
| Assumptions and limiting conditions | What the appraiser assumed and any limits on the work |
| Information considered | The records, sales and data the appraiser looked at |
| Procedures and reasoning | The steps followed and why the value makes sense |
| Valuation method and rationale | Which approach was used and why it fits |
| Specific basis for the value | The evidence, such as comparable sales |
For a house, the date of transfer matters most. If the gift was made last spring, the value should be as of last spring, using sales from around that time and the house as it was then. That is a retrospective appraisal, and it is routine work.
Why a bare number can fall short
Look at the last three rows of that table. Reasoning. Rationale. Specific basis. The regulation is asking the appraiser to show the work.
A one-page value letter, or a form report with a stack of checkboxes and no explanation, may not answer those questions well. A Zestimate screenshot stapled to a Form 709 is a scrapbook, not an appraisal.
Most of my private work is narrative reports for exactly this reason. They walk the reader through the property, the comparable sales (recent sales of similar homes nearby), how each adjustment was measured from real sales, and how the value was reconciled, with the evidence attached. Facts over feelings. If a CPA, an IRS examiner or a judge reads it two years later, they should reach the same understanding without calling me.
A good report should also teach the reader the market as of that date: which way prices were moving, which sales carried the most weight, and why. That is what turns a number into a defensible number.
Checklist before you hire an appraiser for a tax filing
- Name the purpose. Gift tax, estate tax and charitable donations use different rules. Tell the appraiser which one.
- Confirm independence. No family, no employees, no one on either side of the gift.
- Ask about experience with retrospective and tax-purpose appraisals of similar homes.
- Give the exact transfer date and a copy of the recorded deed with its legal description.
- Ask for a report that states both dates and the purpose, and shows its comparable sales and reasoning.
- Share the facts about condition as of the transfer date: repairs, upgrades and problems.
- Send the report to your CPA before filing. Tax treatment depends on the facts, so confirm with a CPA or tax attorney.
Key takeaways
- For gift tax, the definition comes from Treasury Regulation 301.6501(c)-1(f)(3).
- The appraiser must appraise regularly, know the property type and be independent of both parties.
- The report must state dates, purpose, method, reasoning and the specific basis, such as comps.
- Charitable donations use a different, stricter definition. Tell the appraiser the purpose.
People also ask
Can a real estate agent's market analysis be a qualified appraisal?
It would have to meet every requirement, including the appraiser tests and the required contents, and the preparer cannot be family or an employee. A comparative market analysis is usually built for pricing a listing, not for this.
What happens if my gift isn't adequately disclosed?
Under Regulation 301.6501(c)-1(f), the IRS can assess gift tax on that gift at any time, with no limitations period running.
Can the appraisal be done after the gift?
Yes. The appraisal states both the date of transfer and the date of the appraisal, and the value is set as of the transfer date.
Sources
Got a question we haven't answered?
Suggest a topic or ask your own appraisal question. The best ones become posts.