Gift Appraisals for Parents Giving a House to Their Children in Pennsylvania and Delaware

What a gift appraisal is

A gift appraisal gives the home's fair market value as of the date of the gift. That date is the valuation date, not the day of the inspection or the day the return is filed. The IRS Form 709 instructions and Treasury Regulation 25.2512-1 both tie the amount of the gift to its value on that date.

Fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither forced to act and both with reasonable knowledge of the relevant facts. It is not a forced-sale price.

For real estate, the instructions point first to an arm's-length sale of the property on or before the valuation date, and otherwise to comparable sales. A gift within a family is not an arm's-length sale, so the value comes from comparable sales. That is the appraiser's job.

For context, the IRS treats a gift as any transfer to a person where full value is not received in return (IRS gift tax FAQ). Whether a sale to a child below market value counts is a question for your attorney.

The 2026 numbers and dates

A donor who gives more than the annual exclusion to any one person (other than a spouse) generally must file Form 709, even if no tax is due. Spouses who own the house together each file. All reportable gifts for the calendar year go on one return. An income tax extension also extends the time to file Form 709, but not the time to pay.

Sources: Rev. Proc. 2025-32, § 4.42, the IRS gift tax FAQ and the IRS Form 709 instructions ("Who Must File", "When To File").

Why December 31 matters

The annual exclusion runs by calendar year, so a gift counts toward 2026 only if it is complete by December 31, 2026. Under Treasury Regulation 25.2511-2(b), a gift is complete when the giver has "so parted with dominion and control as to leave in him no power to change its disposition."

Which step completes a gift of real estate is a question for the family's attorney.

For 2026 gifts, call by early December. Inspections are scheduled in the morning, and the report is delivered within 48 hours of inspection. No appraiser can promise a particular date, but calling early helps.

What the IRS expects to see on Form 709

Adequate disclosure

A gift must be adequately disclosed on Form 709 for the statute of limitations to start running. If it is not, gift tax on it may be assessed at any time (Treasury Regulation 301.6501(c)-1). Adequate disclosure includes a description of the property, the donor and each recipient and how they are related, and either a qualified appraisal or a detailed description of how the value was set.

The IRS Form 709 instructions say to "attach any appraisal used to determine the value of real estate or other property." Without one, the return must fully explain how the value was determined. For the CPA: the instructions define a substantial valuation understatement as a reported value of 65% or less of the actual value, and a gross one as 40% or less.

What a qualified appraisal must contain

In plain English, from Treasury Regulation 301.6501(c)-1(f)(3):

• The appraiser appraises regularly or holds out to the public as an appraiser, and is qualified for the property type.
• The appraiser is not the giver, the recipient, a family member of either, or their employee.
• The report states the date of the transfer, the date of the appraisal and its purpose.
• It describes the property, the appraisal process, and the assumptions and limiting conditions.
• It covers the information considered, the reasoning, the valuation method and why it was used.
• It gives the specific basis for the value, such as specific comparable sales.

What Ian's report states

Ian's gift appraisal report states the effective date (the gift or deed date) and the intended use (gift tax reporting), and includes his signed certification and license number, as USPAP requires. It values the whole house. A child's share of the house, and any fractional or other discounts, are handled by the CPA or attorney.

Gift vs. inheritance: the basis difference

The recipient's basis in a gift is generally the same as the donor's (IRS Publication 551). If the value on the gift date is less than the donor's adjusted basis, the gift-date value is used for figuring a loss. So the gift-date value still matters for the child's records. An heir's basis is generally the value on the date of death (IRS FAQ); see date-of-death appraisals.

Form 709 also asks for the donor's adjusted basis. It helps to keep the closing statement and records of improvements with the appraisal. Your CPA or attorney can compare the two paths for your family.

Pennsylvania: no gift tax, but watch the one-year rule

Pennsylvania "does not tax gifts made from detached or disinterested generosity" (PA Revenue). But a transfer made without full value within one year of the donor's death is subject to PA inheritance tax, to the extent it exceeds $3,000 per recipient in a calendar year (72 P.S. § 9107(c)(3)).

The PA Revenue REV-1510 instructions say those transfers "should be valued as of the date of death and not the date of transfer." So if a parent dies within a year, the estate may also need a date-of-death value for the estate. Which value applies is the estate attorney's call. REV-1510 also says continued rent-free occupancy can make the property taxable, so ask your attorney if a parent plans to keep living there. Rate for context: 4.5% on transfers to children and other lineal heirs.

Pennsylvania's regulations exclude transfers between a parent and child from state realty transfer tax (61 Pa. Code § 91.193). Your attorney handles the deed and any local transfer tax.

Delaware (New Castle County)

Delaware's gift tax is repealed (Delaware Code Title 30, Chapter 14), and its estate tax was repealed for deaths after December 31, 2017. So for a Delaware house, the federal rules above drive the appraisal: Form 709, the gift-date value and carryover basis. Ian is a Delaware Certified Residential Real Property Appraiser (X2-0010765) and covers New Castle County, DE. Talk to your attorney about the deed.

How a gift appraisal works with Ian

1. Call or email. Share the address, the planned or actual gift date, and who will rely on the report (attorney, CPA).
2. Confirm the assignment. Ian confirms the intended use (gift tax reporting), the intended users and the effective date. For a gift already made, he appraises retrospectively as of the gift or deed date, the same way as a date-of-death appraisal.
3. Inspect the house. Interior and exterior, scheduled in the morning.
4. Research the market. Comparable sales in the home's own local market, as of the effective date.
5. Deliver the report. A USPAP-compliant report of the whole house's value, delivered within 48 hours of inspection, for the CPA or attorney to attach to Form 709.

Helpful to have: the deed or planned deed date, your attorney's or CPA's name, any recent appraisal or listing, and a list of improvements since purchase. For other personal decisions about a home, see private home appraisals.

Fee and turnaround

The fee is $500 base per appraisal; more complex cases are quoted individually. The report is delivered within 48 hours of inspection. See what's included in the $500 fee.

The appraisal is for valuation purposes only and is not legal, tax, or estate advice.

Areas served

About Ian Ritter

Common questions about gift appraisals

Related services: date-of-death appraisals · estate appraisals · private home appraisals · Request an appraisal

This page summarizes published government guidance and is not legal or tax advice. Talk to your attorney or CPA about gifting, filing and deed questions.