Capital Gains Appraisal

Capital Gains Appraisals

When property owners are considering selling an investment property or a long-held residence, understanding the potential capital gains tax liability is an important part of the decision. Capital gains tax is calculated on the difference between the property's sale price and its cost basis — typically the original purchase price plus the cost of qualifying improvements. A current appraisal helps property owners assess what their gain would be at today's market value before committing to a sale.

In some cases, a retroactive appraisal may be needed to establish the property's value at a specific point in time — such as when the property was converted from a primary residence to an investment property, when it was inherited (to establish the stepped-up basis), or when a gift was made.

When You Need a Capital Gains Appraisal

Pre-Sale Planning: Before listing an investment property, a current appraisal gives you a realistic estimate of market value and helps you calculate the potential tax liability. This information is essential for deciding whether to sell, hold, or pursue a 1031 exchange.

Inherited Property: If you inherited property, your cost basis is the fair market value at the date of the decedent's death (the "stepped-up basis"). If no appraisal was done at that time, a retroactive appraisal can establish this value. When you eventually sell, the capital gain is calculated from this stepped-up basis.

Conversion of Use: When a primary residence is converted to a rental property (or vice versa), the property's fair market value at the time of conversion may affect how capital gains are calculated upon eventual sale.

Gifted Property: The tax basis for gifted property can be complex. An appraisal at the time of the gift may be needed to establish value for gift tax purposes and to determine the recipient's cost basis.

Working with Your Tax Advisor

We provide the appraisal — your accountant or tax advisor determines the tax implications. Our role is to establish an accurate, well-supported market value as of the relevant date. We work with financial planners, CPAs, and tax attorneys throughout Westchester County, Manhattan, and Greenwich, CT.