If you are giving a house, a rental or a parcel of land to a child or other relative, the number that matters is the property's fair market value on the day the gift is made. A written appraisal from a certified appraiser is the document that supports that number on your gift tax return, and it protects the person receiving the property when they sell later. We are a New Jersey appraisal firm, and the questions below are the ones donors and their attorneys and CPAs bring us before a deed is signed.
TL;DR
- Real estate is reported at fair market value on the date of the gift, not the filing date, according to the IRS Form 709 instructions.
- Adequate disclosure on Form 709 needs a complete return plus either a qualified appraisal or a detailed description of how value was determined.
- For 2026 the annual exclusion is $19,000 per recipient, and most real estate gifts exceed it, so the return and the value support matter.
- The recipient generally inherits the donor's basis, so the appraisal also shapes the recipient's future capital gain.
- A charitable donation of real estate follows different appraisal rules than a family gift.
Table of Contents
- What value the IRS wants on a gifted property
- When a real estate gift needs an appraisal
- What a gift appraisal report should contain
- Form 709 and the numbers that go with it
- Why the appraisal matters to the person who receives the property
- Gift of real estate versus charitable donation
- Family transfers that are part gift, part sale
- Common mistakes in valuing a gifted property
- How we handle gift valuations in New Jersey
- Our perspective
- FAQ
- Sources
What value the IRS wants on a gifted property
The IRS instructions for Form 709 state that the reportable value of a gift is its fair market value on the date the gift is made. They define fair market value as the price at which property would change hands between a willing buyer and a willing seller, neither being compelled to act, and both having reasonable knowledge of the relevant facts (Instructions for Form 709). For real estate, the principal evidence is an arm's-length sale near the gift date or adjusted comparable sales.
Two consequences follow.
The date is fixed. The value is not what the property is worth when you file, and it is not what you paid years ago. It is the value on the day the deed is delivered. If the market moved between the day you decided to give and the day you recorded the deed, the later date controls.
The yardstick is the open market. Under Treasury Regulation 25.2512-1, a forced-sale price, or a price from a market other than the one in which the property is commonly sold, is not fair market value. A figure from a family conversation, a tax assessment or an online estimate does not meet that standard on its own.
That is the job of a gift appraisal: to state, as of a specific date, what the property would sell for in its own market, and to show the evidence behind the number.
When a real estate gift needs an appraisal
A gift of money is easy to value. A gift of a house is not, and the IRS asks for more than a figure.
A gift is "adequately disclosed" when the donor files a complete Form 709 and includes either a qualified appraisal or a detailed description of the method used to determine fair market value (Instructions for Form 709). The same instructions require that any appraisal used to value real estate be attached to the return. If supporting documents are not attached, Schedule A must contain a full explanation of how the value was determined.
In practice, an appraisal is worth commissioning in these situations:
- The gift is larger than the annual exclusion. For 2026 the annual federal gift tax exclusion is $19,000 per recipient, and married donors can double it to $38,000 per recipient through gift splitting (American Century Investments). Almost every house and most building lots are worth far more than that, so a return is filed and the value must hold up.
- You are giving a partial interest. A one-half or one-third share of a property, or a transfer to a trust, still has to be valued as of the gift date.
- The gift is part of a larger plan. Parents who give property over several years, or who combine gifts with estate planning, need a consistent record of value for each transfer.
- Siblings or other heirs may later question the number. A dated, signed report settles the question before it becomes a dispute.
- The gift happened in a prior year. If a transfer was made years ago and the value was never documented, a retrospective appraisal can establish what the property was worth on the earlier date.
What a gift appraisal report should contain
The IRS describes what it expects from a real estate appraisal in the Form 709 instructions and in Publication 561. A report that stands up includes:
- A complete property description. Street address, legal description, lot and block number, dimensions, physical features and condition.
- Use and zoning. The current use, the zoning, the permitted uses, and any potential higher or better use. This matters most for land and for properties that could be redeveloped. Our article on how zoning affects appraisals explains why.
- Comparable sales with adjustments. The IRS says comparable-sales analysis should use several similar properties and adjust their sale prices for differences in sale date, size, condition and location. The weight each comparable carries depends on how similar it is, how recent it is, whether the sale was at arm's length, the market area and market conditions (Publication 561).
- A stated valuation date. For a gift, the date of the transfer.
- The reasoning that connects the evidence to the conclusion. A reader at the IRS, or a judge, should be able to follow how the appraiser got from the sales to the number.
This is where the quality of an appraisal shows. Two reports can reach different values from the same public records, because one looked at the condition of the kitchen, the quality of renovations and how buyers would react to the layout, and the other applied a price per square foot. We treat condition, workmanship, layout, marketability and location influences as part of the analysis, because a gift valuation may be read closely years later.
Form 709 and the numbers that go with it
A gift of real estate is normally reported on Form 709, the federal gift tax return. Filing a return does not mean tax is owed. Taxable gifts above the annual exclusion generally reduce the donor's lifetime exemption before any gift tax is due (Fidelity).
| Item | 2026 figure | Source |
|---|---|---|
| Annual exclusion per recipient | $19,000 | Montana State University Extension |
| Annual exclusion with gift splitting (married donors) | $38,000 per recipient | American Century Investments |
| Lifetime exemption per individual | $15,000,000 | Montana State University Extension |
| Top gift tax rate | 40% | Montana State University Extension |
Deadline. Form 709 is generally due April 15 of the year after the gift. An extension of the filing date to October 15 is available, but it does not extend the time to pay any tax owed (Jupid). Because the appraisal must be attached or the valuation method fully explained, order the report well before the return is due, not the week of the deadline.
A worked example
This is an illustration, not a client case. A parent gives a New Jersey house, appraised at $640,000 on the date the deed is delivered, to one adult child. With the $19,000 annual exclusion, the taxable gift is $621,000. That amount is reported on Form 709 and reduces the parent's lifetime exemption from $15,000,000 to $14,379,000. No gift tax is due, but the return is still required, and the appraisal is the evidence behind the $640,000.
If the parents are married and elect gift splitting, each spouse reports half of the gift. Their combined annual exclusion for that child is $38,000, so the taxable amount is $602,000. Your CPA or tax attorney decides how to apply these rules to your facts.
Why the appraisal matters to the person who receives the property
The donor files the return, but the recipient lives with the number longer.
In general, a person who receives property as a gift takes over the donor's adjusted basis when the property's fair market value at the time of the gift is at least that basis. If the donor paid gift tax on a gift made after 1976, the recipient's basis increases by the gift tax paid on the net increase in value. When the recipient later sells, gain or loss is the amount realized minus adjusted basis (IRS, property basis and sale of home). Different basis rules apply for loss calculations when value at the time of the gift was lower than the donor's basis.
An illustration: a donor bought a house for $210,000 and gives it away when it is worth $640,000. The child's starting basis is generally the donor's adjusted basis, not $640,000. If the child later sells for $700,000, the gain is measured from that carried-over basis, before any adjustments for improvements. The gift-date appraisal does not change that basis, but it documents the value at transfer, and it records the property's condition and market at the time. That record is useful when the family's accountant reconstructs the history of the property years later.
This is also why the choice between giving a property during life and leaving it at death deserves a conversation with your estate attorney and CPA before you sign a deed. An estate valuation uses a different date. Our guides on the alternate valuation date and on estate appraisal requirements in New Jersey cover that side.
Gift of real estate versus charitable donation
The phrase "gift appraisal" sometimes describes a donation to a charity, which follows a different set of rules. A charitable donation generally supports an income tax deduction rather than a family gift tax filing. Publication 561 states that, because real estate is unique and valuation is complicated, a detailed appraisal by a professional appraiser is necessary for a charitable contribution of real property. For real property over $5,000, a qualified appraisal and Form 8283 are generally required, and if the claimed deduction exceeds $500,000, the appraisal generally must be attached to the return (Publication 561).
Timing also differs. Guidance from a law firm summarizing the rules states that a charitable appraisal must be dated no earlier than 60 days before the contribution and be received by the due date of the return, including extensions, on which the deduction is first claimed. It must follow the substance and principles of USPAP and be prepared by a qualified appraiser (Kaufman & Pack). Our article on the charitable donation appraisal for real estate goes through these requirements in more detail.
Family transfers that are part gift, part sale
Many New Jersey families do not give a house outright. A parent sells to a child below market value, and the difference is a gift of equity. That structure raises two questions at once: what the market price is, and what the gift portion is. If a mortgage is involved, the lender will also want an independent value. We cover this in Gift of Equity Appraisal: Why NJ Family Sales Need More Than a Price. Whichever structure you choose, the principle is the same: the number must come from market evidence as of a stated date.
Common mistakes in valuing a gifted property
- Using the tax assessment as value. In New Jersey, assessments are tied to the municipality's own ratio and revaluation cycle, and they are not a statement of fair market value on the gift date.
- Valuing as of the wrong date. The gift date is the date of transfer. An appraisal as of today, for a deed signed last spring, answers a different question.
- Skipping the condition. A property with deferred maintenance, an unpermitted addition or an extensive renovation cannot be valued from records alone.
- Ignoring land and zoning. Vacant land and properties with redevelopment potential need a highest and best use analysis, as the IRS guidance above makes clear.
- Waiting for the return deadline. An appraisal ordered at the last minute leaves no time to fix a missing item.
How we handle gift valuations in New Jersey
New Jersey Real Estate Appraisal Group is a state-certified appraisal firm serving homeowners, attorneys, executors, CPAs and financial professionals throughout New Jersey. Our reports follow USPAP standards, and we have more than 26 years of appraisal and real estate experience, including hands-on renovation and fix-and-flip work, which helps when a property's condition and improvements drive its value.
For a residential gift, a home appraisal in New Jersey is published at $495 to $750. If the gift sits inside an estate plan, or the property is part of an estate and the date of death is the reference point, our certified estate and date-of-death appraisals are published at $595 to $850. Commercial property is quoted separately on our commercial appraisal page, and retrospective appraisals, for gifts made in earlier years, are listed on our services page.
Tell us the property address, the gift date or planned date, and who will be reading the report (your attorney, your CPA or the IRS). That lets the report be written for its purpose from the start.
Ready to document a gift? Request a quote for your New Jersey property and we will tell you what we need to begin.
Our perspective
A gift of real estate feels like a family decision, and it is. But it is also a financial event with a date and a number attached, and both will be read by people who were not at the kitchen table.
We have spent more than 26 years appraising and working on New Jersey property, including renovating and flipping it. That experience shows in the way we read a house. Square footage and public records tell you a little. Condition, workmanship, layout, how buyers react to the street and the market on the valuation date tell you what the property would actually sell for.
That is why we argue for a full, USPAP-compliant appraisal for any significant real estate gift. It gives your attorney and CPA a value they can attach, defend and build on. It gives the person receiving the property a record that will still make sense when they sell. And it spares the family a disagreement about what the house was worth.
Order it before the deed is signed, when the date of value is still in front of you.
Alek Petreski
FAQ
Do I need an appraisal to gift a house to my child?
The IRS requires adequate disclosure on Form 709, which means a complete return and either a qualified appraisal or a detailed description of the valuation method (IRS). Any appraisal used to value real estate must be attached. A certified appraisal gives your CPA a clear, dated document to attach.
What date should the appraisal be as of?
The date the gift is made. The IRS bases the reportable value on fair market value on that date, not on the filing date. If the deed has already been delivered, a retrospective appraisal can establish value as of that earlier date.
Will I owe gift tax if the house is worth more than $19,000?
Not necessarily. The amount above the annual exclusion is generally applied against your lifetime exemption, which is $15,000,000 per individual for 2026, so most donors file a return without paying tax (Montana State University Extension). Confirm your situation with your CPA or tax attorney.
Does the person receiving the gift get a new tax basis?
Usually the recipient carries over the donor's adjusted basis when the property's fair market value is at least that basis, with gift tax paid on post-1976 appreciation adding to it (IRS). A later sale compares the amount realized with that basis. Your tax adviser can model the result.
Is a charitable donation of real estate appraised the same way?
No. For a charitable gift of real property over $5,000, a qualified appraisal and Form 8283 are generally required, with timing rules that differ from a family gift (IRS Publication 561). Tell us at the outset if the recipient is a charity so the report is prepared for that purpose.
Sources
- Instructions for Form 709 (2025), Internal Revenue Service
- 26 CFR 25.2512-1, Valuation of property; in general
- Publication 561, Determining the Value of Donated Property, Internal Revenue Service
- Gifting: A Property Transfer Tool of Estate Planning, Montana State University Extension
- Rules for Gifting Money to Family for a Down Payment in 2026, American Century Investments
- What is gift splitting and how does it work?, Fidelity
- Gift Tax Return Deadline 2026, Jupid
- Property (basis, sale of home, etc.), Internal Revenue Service
- Appraisal Requirements for Donations of Real Property, Kaufman & Pack
Recommended
- Charitable Donation Appraisal for Real Estate: What the IRS Requires
- Fractional Interest Appraisal: IRS Ready for Estate, Gift, Divorce
- Gift of Equity Appraisal: Why NJ Family Sales Need More Than a Price
- Executors, Get a State Certified Form 706 Appraisal Before Filing
This article is provided for general informational purposes only and does not constitute legal, tax, or financial advice. Real estate appraisal requirements can vary by assignment and intended use. For advice specific to your situation, consult the appropriate legal, tax, or financial professional.