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ldybrd: "Boy, I was excited about Roy's article since I know the value of my home has increased greatly in the past 10 years. Now, after the posts of the day, I think I'm just confused.

Anyhow, I do have a nagging question if someone could clue me in. Just where and how do I come up with the figure for the "fair market value" of my home anyhow? And what sort of documentation would be needed IF future articles/research point towards actually being able to make a "deemed" sale of my home?"

I suspect that an appraisal from an appraiser that routinely appraises for mortage lenders that sell their mortgages on the secondary market would probably be the "best" evidence. I believe that these are generally running in the neighborhood of $300 +/- $50.

You might also try a Comparative Market Analysis prepared by an experienced real estate broker familiar with the neighborhood. I believe that they routinely prepare these when trying to win a listing; my conscience would require me to acknowledge (but probably after the CMA was delivered to me) that I did not intend to list and to offer some compensation $100-$200 range.

Last, depending upon state law and local custom, you might use assessed value for ad valorem tax purposes. By quirk of fate, Texas law requires taxing districts to assess value at FMV every year as of January 1st. The process will take at least several months and can last well into October. I have disincentive to accept a hugely overvalued number because that means more taxes for to pay.

Not all states have similar requirements. Prop. 13 certainly affects California assessments numbers, for example.

If the consensus view WRT this issue changes, I intend to follow the third route. I am sitting on gains (but nowhere near 500k [total value of my house is not even near that number], but do not expect rocket-like appreciation to ever make 500k an issue. In addition, Texas is a community property estate, so entire basis of house will be stepped-up if one of us dies and we still own this house (under current law). I would not mind a good result, but I will not lose any sleep over it.

Just my $0.02. Regards, JAFO
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