Qualified Appraisal is an appraisal that meets the definition of qualified appraisal used by the Internal Revenue Service (IRS). An appraisal is considered “qualified” when it is performed by a professional appraiser with sufficient experience to make the value determination and document the methodology used in obtaining the fair market value of the subject property. The appraiser must disclose any limitations due to the inspection and time constraints of the appraisal process.

Qualified appraisals are required for various tax and financial purposes, such as estate tax valuations, charitable donations, property divisions and so on. The IRS typically mandates that certain income tax regulations and local lender requirements are met by the qualified appraiser.

A qualified appraisal must include a written report that is signed and dated by the appraiser. The report must contain a detailed description and analysis of the premises, including photos and diagrams. The report must also list the specific assumptions and methods used to determine the fair market value of the premises.

Qualified appraisals are based on the “three approaches”—income approach, cost approach, and market approach. These approaches are used to determine the fair market value of the premises by comparing it to similar properties.

For the income approach, the appraiser predicts the property’s future cash flows given current market conditions. For the cost approach, the appraiser estimates the value of the premises by adding the land’s value to the costs it would take to replace structures on the land with comparable structures. For the market approach, the appraiser finds comparable real estate in similar markets and uses these properties to estimate the value.

Qualified appraisals are highly credible and are usually accepted in courts of law. It is important to remember that the appraiser must be licensed and qualified to complete the appraisal and should currently meet the educational and professional criteria established by the particular state or the International Society of Appraisers. The purpose of a qualified appraisal is to ensure that all taxation processes and transactions regarding real estate are conducted in an impartial and trustworthy manner.