New York DTF Valuation Standards and Estate, Part II: The Appraisal Process

The New York Department of Taxation and Finance (‘DTF”) recognizes the Office of Real Property Tax Services (“ORPTS”) and Appraisal Standards Board (“ASB”) definition of  Uniform Standards of
Professional Appraisal Practice (“USPAP”)
for the appraiser inspection process requiring licensed appraisers identify 1) the property to be inspected; 2) the purpose and intended use of the assessment report; 3) the data collection and analysis process; 4) conditions or limitations to valuation; and 5) the effective date of the valuation. Property rights and interests are a key rule element in the rules to professional appraiser valuation of real property in the state.

Property Rights and Interests

New York laws provide that property rights and interests be appraised as part of a real property valuation. Most real property is valued with assumption of “fee simple estate, unencumbered, with all property rights included”. In cases where lesser ownership exists, the valuation may be subject to modification or manual override under USPAP Article 2 mass appraisal indications of value. Circumstances where contracts, easement or conservation easement, covenants, declarations, ordinances or severed mineral rights or oil and gas rights are under consideration, a restricted or partial estimation may be applied. Direct market evidence is a standard criterion to state appraisal reporting. Where the sum of a partial interest is not equal to the fee simple value of a property, combined approaches to valuation may applied to derive an estimate that adequately supports a partial rights and interests in a property.

The Valuation Process

The ORPTS requires a high level of professional practice to meet USPAP Standards unless otherwise subject to jurisdictional exception. The systematic process of collecting, analyzing, and processing appraisal data into “well-reasoned value estimates.” The “highest and best use analysis” is a standard practice in the collection, analysis, and reconciliation of property value data for purposes of record and taxation.

According to the USPAP Standard 1, development of a credible valuation process requires that an appraiser be able to identify legal issues or market constraints devaluing property at the time of the appraisal. Any other conditions affecting comparable value estimates leading to “discount” or increased valuation of “specialties” must be acknowledged and reflected in appraisal record.

Owners of estate property assets should be aware that appraisers have the liberty to apply hybrid, individual and mass appraisal processes to the valuation of real property assets for purposes of ad valorem taxation. The argument is that combined valuation techniques optimize the valuation process. USPAP, Standard 6: “Mass Appraisal, Development and Reporting” provisions allow for purposes of ascertaining shared tax levy. Individually owned “unique properties” are assessed separately.


Estate Law Attorney Practice

Probate proceedings can prolong the distribution of real property assets. Protect your estate and its heirs from probate court ordered assessment of real property assets by contacting a licensed attorney experienced in estate planning valuation. Ettinger Law Firm is a licensed New York attorney practice specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law matter.

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