Permalink Submitted by Alan - IRA critic on Fri, 2018-08-03 16:18
All IRA custodians are required to report the year end market value by 1/31 of the following year to the IRS and IRA owner. The IRS receives Form 5498 with the stated valuation and this form also includes a code to identify that the IRA holds real estate. IRA owners should ask the custodian what is required by the custodian for this report, and who will pay for it. For example, an annual appraisal might be required which will be costly. Commerical appraisals include analysis of the income flow from renting the property and that will increase the cost. Perhaps some custodians will only require an appraisal every 3 years, and use a simple inflation factor to update the values for intervening years. The value of the property will likely affect the requirement for valuations. Tax assessment figures vary too much to be used independently, but perhaps a custodian will allow the assessment figure change from year to year to be used to update the figure from a prior physical appraisal. In short, the IRA owner should ask the intended or current custodian up front what will be required. Obviously, if the IRA must pay for the appraisal, the cost must be directly paid from the IRA account holding the property.
Permalink Submitted by Alan - IRA critic on Fri, 2018-08-03 16:18
All IRA custodians are required to report the year end market value by 1/31 of the following year to the IRS and IRA owner. The IRS receives Form 5498 with the stated valuation and this form also includes a code to identify that the IRA holds real estate. IRA owners should ask the custodian what is required by the custodian for this report, and who will pay for it. For example, an annual appraisal might be required which will be costly. Commerical appraisals include analysis of the income flow from renting the property and that will increase the cost. Perhaps some custodians will only require an appraisal every 3 years, and use a simple inflation factor to update the values for intervening years. The value of the property will likely affect the requirement for valuations. Tax assessment figures vary too much to be used independently, but perhaps a custodian will allow the assessment figure change from year to year to be used to update the figure from a prior physical appraisal. In short, the IRA owner should ask the intended or current custodian up front what will be required. Obviously, if the IRA must pay for the appraisal, the cost must be directly paid from the IRA account holding the property.