APPRAISALS

When a landowner donates land or a conservation easement to Placer Land Trust valued at or above $5,000 and seeks a charitable income tax deduction for a gift or bargain sale of the land or easement, a qualified appraisal is required. Likewise, a qualified appraisal is required for projects for which Placer Land Trust uses funding from public sources and some private foundations. The appraised value may be used to determine the maximum sale price, and helps determine landowner tax benefits.

The obligation to pay for an appraisal is the landowners, and helps demonstrate the landowner's commitment to the land conservation project, giving Placer Land Trust some assurance to justify its expenditure of staff time and resources on the project. Appraisals are typically several thousand dollars, and can take from 1-3 months to complete depending on the availability of qualified appraisers.

Donors should consult with their tax advisers concerning the details of these regulations but the substantiation requirements can be summarized as follows.

1. The donor must obtain a written "qualified appraisal" of the property. The appraisal must be performed no earlier than 60 days before the gift is made, but an older appraisal can in many circumstances be updated.
   • An appraisal includes, among other things:
   • a description of the property,
   • the method of valuation used to determine the fair market value of the property,
   • certain information about the appraiser and his or her qualifications, and

   • a description of the fee arrangement between the donor and the appraiser.

2. The appraisal must be performed by a "qualified appraiser." In general, this means the appraiser must be qualified by training and experience or certification to perform appraisals. Placer Land Trust relies on appraisals by MAI-certified appraisers to determine fair market value of property and conservation/agricultural easements. For easements, the appraiser you choose should have experience with development rights appraisals since it is possible that the IRS will look closely at your claims. Further, the appraiser cannot have any personal stake in the property or the gift, cannot be related to the donor or Placer Land Trust, or have any business relationship with either party that would cause a reasonable person to question the appraiser's independence. The appraiser's fee cannot be based upon a percentage of appraised value.

3. A "fully completed appraisal summary" must be reported on IRS Form 8283 and attached to the donor's income tax return. The form includes information identifying the donee (Placer Land Trust), the appraiser, and the property. The summary must be signed by the appraiser and Placer Land Trust, although the Trust's signature does not represent concurrence in the appraised value of the donated property

4. The donor is required to maintain records pertaining to the gift, including a copy of the qualified appraisal.

If Placer Land Trust sells or otherwise disposes of the donated property within two years of the gift, the Trust must file IRS Form 8282, and send a copy to the donor. This form allows the IRS to cross-check the sales price received by Placer Land Trust against the value claimed on the donor's tax return. The IRS will impose substantial penalties if the value of a gift is overvalued.

For more information about appraising your land for preservation with Placer Land Trust, contact Executive Director Jeff Darlington at (530) 887-9222 or jeff@placerlandtrust.org.

Placer Land Trust 11521 Blocker Drive, Suite 100 Auburn, CA 95603 (530) 887-9222 info@placerlandtrust.org

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