Question: My tax advisor suggested that I obtain an appraisal of my property that reports the value before the fire and the value of the land after the fire in order to document the reportable loss.  My insurer has advised that they are going to provide me with an appraisal, but my tax adviser still suggests that I pay a certified appraiser and obtain my own documentation.  Is this necessary?

Answer: For tax purposes you need a market appraisal.  This is the amount a willing buyer would have paid for your property before the fire, and the amount that a willing buyer would pay for the land after the fire.  An insurance appraisal is not necessarily going to provide that information.  The insurance company appraiser is trying to establish the cost to replace the destroyed home to its previous condition.  Even if the insurance appraisal provides market value, your own appraisal may help you with necessary documentation if you want to appeal the insurer’s report.