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Real Estate Appraisal Blog

The Keys to Successful Long-Term Wealth Management Planning

by Bryant Asset Advisors on 04/12/13

Acting now, not later, will ensure more long-term options.

Estate tax laws have been in flux for the last decade. Most recently, Congress passed the American Taxpayer Relief Act of 2012 (ATRA) on January 1, 2013. This new law just narrowly prevented sunset provisions that would have reinstated pre-2001 exemptions of $675,000 (down from $5.12 million in 2012). The uncertainty about whether ATRA would pass caused a sense of urgency when it came to long-term estate planning. But, just because ATRA did pass doesn’t mean that Advisors and their clients should wait to enact long-term plans.

Far From “Permanent”
If anything, the last 10 years have taught us that the Transfer Tax is in a constant state of flux. While ATRA claims to “permanently” extend the $5 million gift, estate, and GST exemptions as well as the portability provisions that allow surviving spouses to take advantage of unused gift and estate tax exemptions, recent history proves that Congress is not averse to changing the law. These latest exemptions and provisions are not set in stone and could change at any time. 

Congress and the Obama administration continue to wrestle with the debt ceiling and instituting broader tax reform. Every piece of tax legislation in the past 10 years under multiple administrations has included reform of the Transfer Tax. While Congress and the White House work to decrease the national debt, it is completely within the realm of possibility that the exemptions and provisions provided under ATRA could be repealed.

How to Protect Your Assets
With such an unstable tax climate, it is extremely risky to delay planning long-term wealth management. While some of the immediate urgency has been removed with the implementation of this new law, the uncertainty surrounding ATRA’s shelf life should make every Advisor, and their clients, nervous.

L. Timothy Halleron, a partner in the private client group at McDermott Will & Emery LLP, has identified some of the most common wealth planning techniques available under current law. These techniques and transfer vehicles have been the subject of interest by the IRS and a topic of discussion on Capitol Hill as legislators search for solutions to our country’s dismal fiscal situation. Acting now to implement a comprehensive estate plan, including asset valuation and transfer, may just be the most important move Advisors can make for their clients.

Grantor Retained Annuity Trusts
GRATs have become an invaluable tool for protecting assets from the Transfer Tax. But, the White House has suggested that a 10-year minimum should be imposed on GRATs. This minimum would not prevent younger, wealthy individuals from using GRATs but would ensure that older high net-worth clients could no longer use them as a short-term, “rolling” solution. GRATs have been particularly useful for assets that are difficult to value.

If clients are considering using GRATs, they should set them up now so as to avoid any minimums that new legislation might impose. Alternatively, high net-worth individuals could make it a priority to begin the process of assessing the value of the assets they’re most concerned about in order to use other methods to shelter those assets from the Transfer Tax.

Valuation Discounts
Valuation discounts are perhaps one of the most important techniques for long-term wealth management, and they’re under fire. The IRS has scrutinized (and the White House has proposed eliminating) valuation discounts for family-controlled entities like operating businesses and investment entities. While the IRS continues to challenge valuation discounts for family-controlled entities, valuation discounts that consider lack of control or lack of marketability are excellent ways to protect high net-worth estates. The proper counsel, combined with excellent appraisals by a certified appraiser, can work in tandem to ensure valuation discounts are claimed whenever possible.

GST Exempt Trusts
GST Exempt Trusts have been a popular technique for ensuring that assets pass from generation to generation free of the Generation-Skipping Transfer Tax. The Obama administration has proposed limiting the duration of these trusts to 90 years. If Congress enacts this 90-year limit, it will become more difficult for families to increase or even maintain their wealth past 2 generations. Advisors should talk to their clients about GST Exempt Trusts now, before a time limit is imposed.

Grantor Trusts
The administration has not announced a specific position on grantor trusts, but based on their positions on other wealth planning techniques, it stands to reason that grantor trusts may not be available forever. Because grantor trusts could be eliminated in the near future, high-net worth individuals should consider enacting a grantor trust this year. They are an excellent way to ensure long-term wealth management goals are met.

Halleron’s warnings only serve to underline the need for immediate action in long-term wealth management planning. Proper asset valuation by a certified appraiser is key to any successful wealth management plan. Bryant Asset Advisors provides certified commercial, residential, and personal property appraisals to assist Advisors and their clients as they choose the best course of action for their long-term wealth management plan.

CA, OH, IN Inquiries: 858-243-8724
IN, MI, OH Inquiries: 317-730-2423

The How-Tos of Claiming Non-Cash Charitable Donations on Your Tax Returns

by Bryant Asset Advisors on 02/14/13

What You Need to Know Before Claiming Non-Cash Charitable Donations on Your Tax Return

While most of the country is focused on filing their 2012 tax returns, it’s never too early to start your tax planning for 2013. Non-cash charitable donations are a great way to create a tax deduction while supporting a worthy cause. If you didn’t make any non-cash charitable donations that you can claim for 2012, consider making donations in 2013.


When claiming a non-cash charitable donation, it’s important to consider the IRS regulations for itemized claims. Below are some considerations every taxpayer should review in order to claim charitable donations as tax deductible.


Are Itemized Deductions Really Worth It?

Traditionally, you would always file for itemized deductions in order to claim your charitable donations. But before you jump into itemization this time, do the math. Calculate your standard deductions (this number is adjusted every year for inflation). Then, add up your deductible expenses, including: real estate taxes, mortgage interest, and charitable donations. Finally, compare the two numbers. If your itemized deduction is higher than your standard deduction, then it makes sense to file for the itemized deduction. If the math doesn’t add up, then you should not file itemized deductions, as you will receive a greater return by taking the standard deduction.


Only Claim Household Goods Donations, If They’re in “Good” Condition

In an effort to prevent scam artists from taking advantage of the non-cash charitable giving deduction, a 2006 law was passed requiring that all household goods given to charity must be in “good” or “better” condition. This law was intended to prevent taxpayers from using charities like Goodwill as dumping grounds for household items that really should have gone to the dump. The law was also designed to prevent taxpayers from filing claims that were much too high. These same rules apply to other non-cash donations, like cars.


Due to the 2006 law, the IRS can and will deny your deductions on items they deem have “minimal monetary value.” The IRS doesn’t specifically define “minimal monetary value,” but they can deny a claim if they deem that the item is not worth enough to justify the deduction (examples include: used socks and undergarments).


How to Claim More Than $500 in Charitable Donations

If you’re planning on claiming over $500 in non-cash charitable donations for the year, you will need to also fill out Form 8283. This particular form does make it possible for you to inflate their donated properties’ value. But, tax examiners are taking a close look at these forms and may ask you to produce further documentation to verify the property’s value. Be prepared with proper documentation to back up your claims.


No Minimum Donation Amount

One benefit of charitable donations is that the donated item’s value doesn’t have to equal a minimum amount. You can claim donated items worth as little as $5, if you so choose.


Plus, you can also claim non-cash charitable donations besides physical goods, including: appreciated assets, a portion of the cost of a ticket to a charity event, or the gas you used driving for a charity or non-profit.


Remember to Document Your Donations Properly

If you give goods instead of cash donations, the IRS will ask you to value that item and support it with documentation. If you donate your old dresser to Goodwill, make sure to get a receipt. The receipt will help you support your claim for the value of that item.


A 2007 law requires that you to have receipts and/or clear documentation to support every donation you claim, regardless of the amount. Documentation is especially important when it comes to larger gifts. For gifts over $250 in value, the IRS requires that you show an official record of the donation. This official record could be a statement from your bank, credit card company, or a written statement from the charity showing the organization's name, the date, and 501c3 number as well as the amount of the contribution.


Other IRS Rules to Keep in Mind

All charitable donations must be made to “qualified organizations.” This means that the organization is recognized by the IRS. Before claiming a donation, make sure to ask the charity or non-profit if they are a qualified organization. Otherwise, your claim will be denied.


It is also important to note that if you receive any merchandise, services, tickets, etc. in exchange for your donation, you cannot claim that amount on your return. For example, if you gave $100 to a charity and they sent you a ticket to a charity ball valued at $75, you can only claim $25 for that donation. If the item’s dollar value is not listed or publicly available, be sure to ask the charity so you know how much to claim. 


Bryant Asset Advisors Appraisals

If you are considering donating large items (over an estimated $5,000 in worth), Bryant Asset Advisors can help. Our personal property appraisers are certified by the National Auctioneers Association. Our certified appraisers always provide a USPAP (Uniform Standards of Professional Appraisal Practice) compliant appraisal. This type of certified appraisal is an IRS mandate when claiming large items, such as non-cash charitable donations greater than $5K. Contact us to appraise your donated item to determine any of the following:


  • Market Value
  • Fair Market Value
  • Fair Market Value in Continued Use
  • Fair Market Value as Installed (Installed Fair Market Value)
  • Orderly Liquidation Value
  • Forced Liquidation Value
  • Insurable Replacement Value
  • In-Place Value
  • Desktop Review

Give us a call today. We’re here to help you with your personal and commercial property appraisal needs.


CA, OH, IN Inquiries: 858-243-8724

IN, MI, OH Inquiries: 317-730-2423


Capitalization Rates for Single-Tenant Net Leased Properties Hits 5-Year Low

by Bryant Asset Advisors on 02/11/13

Cap Rate Compressions Most Noticeable in Discount Retail Chains in Metropolitan Areas

In the last quarter of 2012, capitalization rates for single-tenant net leased properties remained near record-lows. As Randy Blankstein, President of The Boulder Group, pointed out in his article titled "Net Lease Retail Cap Rates Hit Five-Year Low", cap rates are lowest for net leased retail properties. In fact, the cap rates for these properties declined by 25 basis points at the end of 2012.


During the recession, many investors and developers were unwilling to make more risky investments and so shifted to net leased properties. Now, we are seeing the effects of this “flight to safety,” with more demand for these properties than properties that exist. New construction is limited, causing a 12.5% decline of available retail net leased properties in Q4 of 2012. And, because of the economic downturn, tenants are looking to find the lowest possible rents and are willing to backfill second-generation retail space instead of relocating to newly constructed space. In addition, as Blankstein notes, current interest rates are allowing property owners to refinance and hold properties at low rates rather than sell in this less than desirable market.


This limited supply is causing a ripple effect across the real estate net lease market. As a result, the median asking vs. closed cap rate spread for retail net leased properties declined 7 basis points in comparison to last quarter. These are pretty drastic numbers, and indicate a real shift in the market that seems to be less of a trend and more of the “new normal.”


At Bryant Asset Advisors, we are seeing the same trends, especially the drastic cap rate compression in desirable metropolitan areas. Most notably, we have seen discount retail chains like Dollar General and Auto Zone, who did relatively well in the tough economic climate, become more desirable than ever, and therefore harder to come by. Properties occupied by McDonald’s, 7-Eleven, and Auto Zone saw cap rates decline by between 20-25 basis point by the end of 2012.


Blankstein forecasts that the national retail net lease market will remain very active in 2013 due to economic conditions and tax laws. He also predicts that cap rates will remain near current levels. While we agree that the trends from 2012 seem to suggest a continuation of these investment practices, we also believe that the friction between appraisers and investors could cause a decline in investment in single-tenant retail net leased properties.


Cap rates have historically been a source of friction between appraisers and developers/investors, and will continue to remain so. Appraisers tend to think historically, while developers and investors are more interested in their investments’ future returns. Unless appraisers are educated as to how the current market is different, there could be friction between the investor/developer and appraisers’ cap rates. This could lead to a decrease in financing.


Thanks to a long history of appraising net leased properties, and years in brokerage and development, Bryant Asset Advisors holds a unique position. We know the market and appreciate the importance of advocating for our clients’ best interests. We do not apply formula solutions. Instead, we recognize that each client’s unique situation demands an equally unique solution. We first work to understand our clients’ requirements and appraisal goals, then we collaborate with our clients to develop a plan to achieve them.


Call Bryant Asset Advisors to discuss your net lease property appraisal needs. Our team approach unites our skills with those of our strategic partners to guarantee you the best, most seamless services to achieve your goals.


CA, OH, IN Inquiries: 858-243-8724

IN, MI, OH Inquiries: 317-730-2423


Net Lease Cap Rates

by Bryant Asset Advisors on 01/11/13

Interesting article by Randy Blankstein on capitalization rates in the net lease market. During the recession, many investors and developers shifted to net lease properties as consumers began tightening their belts, and looking for ways to cut back on expenses. Retail chains such as Dollar General (and other “dollar” stores), AutoZone, and others did relatively well in these tough economic conditions. However, cap rates can often be a source of friction between appraisers and investors/developers. Many appraisers tend to think historically, while those on the other side of the equation tend to be forward thinking. Therefore, it’s important for appraisers to know the market. At Bryant Asset Advisors, we have a long history of appraising net leased properties, as well as years spent on the other side in brokerage and development.

Liquidation Value

by Bryant Asset Advisors on 01/09/13

In current economic conditions, clients often require liquidation value estimates.  There are two primary types of liquidation values given, "orderly" and "forced". So what is the difference between orderly and forced liquidation value?

Orderly Liquidation value is the appraiser's professional opinion of the estimated gross amount expressed in terms of dollars, which the asset could typically realize if exposed for public sale at a properly advertised and professionally managed orderly liquidation at a listed or negotiated price usually within a specified time--as of the effective date of the appraisal report. Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers are considered. All assets are to be sold on a per item basis, in "as-is" conditions with purchasers responsible for removal of assets at their own risks and expenses. Any deletions or additions to the total package could change the psychological and/or monetary appeal necessary to gain the price indicated.
Ok, so what is Forced Liquidation value then?

Forced Liquidation Value is the estimated gross amount, expressed in terms of money, that could typically be realized from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an “as is,” “where is” basis, as of a specific date.

Do you need an appraisal that includes liquidation value? We can help. Contact us!

Midwest Regional Office:  317-730-2423
Western Regional Office:  858-243-8724

West:  3525 Del Mar Heights Rd, #621, San Diego, CA 92130
Midwest:  11715 Fox Road, Suite 400-127, Indianapolis, IN 46236