Stepped-Up Basis Appraisals

cliggittvaluation • May 13, 2025

What is a Stepped-Up Basis — and Why Does It Matter for Commercial Property in Florida?

If you’ve inherited a commercial property in Florida — or you're advising someone who has — you’ve probably heard the term “stepped-up basis” come up. It may sound like accountant-speak, but it can save heirs and investors hundreds of thousands in capital gains taxes. Whether you're an estate attorney, CPA, heir, or investor, understanding how the stepped-up basis works (especially here in Florida) is crucial for avoiding tax surprises and making smart decisions with inherited income-producing properties. 


Understanding the Stepped-Up Basis for Commercial Real Estate in Florida

When commercial real estate is inherited in Florida, it brings with it not only a valuable asset, but also a significant opportunity for tax savings through the stepped-up basis rule. This federal tax provision allows heirs to reset the “cost basis” of the inherited property to its fair market value (FMV) as of the date of death — often eliminating taxable gains accrued during the decedent’s lifetime.


Whether you are an estate attorney, CPA, investor, or personal representative managing an estate, understanding the implications of the stepped-up basis is essential for making informed, compliant, and tax-efficient decisions regarding inherited commercial property.


What Is a Stepped-Up Basis?

The stepped-up basis is a tax rule that adjusts the cost basis of an inherited property to its market value at the time of the original owner’s death. For capital gains purposes, this means the heir is treated as having acquired the property at its current fair market value — not its original purchase price.

Example:


A Tampa-area investor purchased a small office building in 1990 for $400,000. At the time of their passing in 2024, the property is appraised at $2.2 million. If the heir later sells the property for that same $2.2 million, there is no capital gains tax liability — because the sale price matches the stepped-up basis. Had the property been gifted before death, the original $400,000 basis would have carried over, resulting in a taxable gain of $1.8 million.


Why It Matters for Commercial Real Estate

The stepped-up basis can deliver substantial tax relief, particularly for heirs inheriting income-producing or significantly appreciated properties. Key benefits include:

  • Elimination of Historic Gains: Capital appreciation that occurred during the original owner’s lifetime is effectively erased for tax purposes.
  • Restarted Depreciation Schedule: The new owner can depreciate the asset based on the stepped-up value — a major advantage for income tax planning.
  • Accurate Basis for Future Transactions: Whether the property is sold, refinanced, or restructured, a clearly established fair market value ensures accurate reporting and compliance.


Who Benefits?

  • Heirs of Appreciated Commercial Assets: Individuals inheriting retail centers, warehouses, office buildings, or mixed-use developments that have significantly increased in value will benefit the most from this provision.
  • Surviving Business Partners or Co-Owners: In certain cases, surviving partners in real estate partnerships or LLCs may receive a basis adjustment on the decedent’s share, which can be critical for succession planning.
  • Real Estate Investors and Developers: Many investors structure their holdings with the intent of transferring assets at death, allowing their heirs to receive a full basis reset and avoid large capital gains exposure.
  • Estate Planning Professionals: Attorneys, financial advisors, and CPAs use stepped-up basis strategies to ensure their clients' estates are structured in a tax-efficient manner.


Why a Professional Appraisal Is Essential

The stepped-up basis hinges entirely on the fair market value of the property as of the decedent’s date of death. A professionally prepared commercial appraisal provides the credible, defensible documentation needed to support this valuation.

A qualified commercial appraisal:

  • Establishes a Legally Compliant Tax Basis: IRS regulations require valuations to be based on substantiated data. Online estimates and tax assessments are not acceptable for estate purposes.
  • Protects Against IRS Penalties: An inaccurate or inflated valuation can trigger audits and result in significant penalties. A third-party appraisal reduces this risk by providing an independent and well-supported valuation.
  • Facilitates Asset Distribution: In cases with multiple beneficiaries, an objective valuation aids in equitable distribution or buyouts of inherited interest.
  • Supports Future Financial Planning: Understanding the current market value of the asset can inform hold/sell decisions, refinancing options, and lease restructuring strategies.


When to Obtain a Commercial Appraisal

  • A commercial appraisal should be obtained at key points in the estate process:
  • Immediately Following the Property Owner’s Death: A date-of-death appraisal provides the basis value required for federal tax filings and capital gains calculations.
  • During Estate Planning: Property owners may obtain appraisals to assess potential exposure to estate taxes or to assist with gifting, trust funding, or business succession planning.
  • Prior to Selling an Inherited Property: If a date-of-death appraisal was not obtained, a retrospective appraisal can still be commissioned to establish the correct basis.
  • During Disputes or Legal Proceedings: A certified appraisal is essential if there is disagreement among heirs or scrutiny from tax authorities.


Specialized Expertise for Florida Commercial Properties

Florida’s commercial real estate market is highly dynamic, with regional variations in value influenced by location, zoning, tenant mix, and local economic drivers. Properties in Tampa, Clearwater, Sarasota, and other growing markets have experienced considerable appreciation in recent years.


Because of this, engaging a local, Florida-based appraisal firm with commercial expertise is vital. Appraisers familiar with the nuances of Florida’s market — including seasonal fluctuations, flood zones, and redevelopment potential — can deliver more accurate and defensible valuations.


Partner with a Trusted Commercial Appraiser

At Cliggitt Valuation, we specialize in commercial appraisals for stepped-up basis reporting, estate settlement, and tax planning throughout the state of Florida. Our licensed appraisers deliver detailed, compliant, and timely reports designed to withstand IRS review and support estate professionals and fiduciaries in their work. Whether you are managing a portfolio of retail assets, overseeing a family-owned industrial property, or guiding a client through estate administration, we are here to assist.


Thank you for your interest. Have questions regarding the local market? Navigate the Real Estate Market with confidence, and contact us at Cliggitt Valuation for your appraisal, consulting, and valuation needs today.


Mike Cliggitt, MAI, MRICS, CCIM

813.405.1705 | 863.661.1165 - Direct Lines

findvalue@cliggitt.com

Appraisal & Valuation Markets


Questions about our blog? Contact our Director of Sales & Marketing, Sydney Avolt.

Sydney Avolt

727.403.7418 - Direct Line

sydney@cliggitt.com

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A New Ballgame: Phillies Reignite Clearwater Development Plans

By cliggittvaluation • July 31, 2025
After a pause following last year’s hurricanes, the Philadelphia Phillies have resumed discussions with the City of Clearwater and Pinellas County to revisit long-term plans for upgrading their spring training complex. While no formal proposal has been submitted yet, early conversations signal a renewed interest in reaching a mutually beneficial agreement. City Manager Jennifer Poirrier, who is leading negotiations on behalf of Clearwater, says the team appears to be taking past community feedback seriously. “The Phillies organization definitely seems to have been listening,” Poirrier said, noting cautious optimism about progress. Pinellas County Administrator Barry Burton has also been involved in the meetings, given the likelihood that the Phillies will request funding from the county’s bed tax—a tax collected on short-term lodging stays. “Our role stems from the tourism impact the Phillies bring,” Burton said. “They’ve indicated that they may request funding from the bed tax, which is why we’re part of these conversations.” Back in 2019, the Phillies requested $40 million from the county’s bed tax to fund a nearly $80 million renovation of BayCare Ballpark and the nearby Carpenter Complex. That proposal didn’t gain traction, especially as the facilities—built in 2004—were significantly newer than others that had received funding, such as the Toronto Blue Jays’ Dunedin complex. Since then, project plans have remained fluid. In 2022, the Phillies unveiled a vision for a year-round player development hub, with cost estimates reaching $300 million. Later, they introduced a proposed mixed-use development—Ballpark Village—featuring residential units, retail, and dining space. The team purchased 13 acres just south of the complex for $22.5 million in November 2023 to support this expansion. Still, a more modest stadium-focused project, with a projected cost around $65 million, seems to be the first step forward. Poirrier confirmed that a scaled-down version is the likely direction in the near term but emphasized openness to more comprehensive plans in the future. “The U.S. 19 corridor holds enormous potential for economic growth,” she said. “We’re dreaming big and keeping our minds open.” The most recent meeting between city, county, and Phillies representatives took place on July 16, with another one scheduled for Friday. While Clearwater hasn’t re-engaged its former consulting firm CAA Icon—paid over $260,000 for its past role in negotiations—it may do so again down the line. From the Phillies’ side, key personnel in the discussions include Director of Florida Operations John Timberlake, BayCare Ballpark GM Doug Kemp, and CFO John Nickolas. Timberlake has not provided public comment on the meetings. City and county representatives, including Poirrier and Burton, are also planning a visit to Philadelphia in late August, a tradition where local officials are hosted by the team at Citizens Bank Park. These visits often include dinners, games, and conversations—but no negotiation meetings are currently scheduled for the trip. The Phillies have held their spring training in Clearwater since 1947 and have built deep ties to the community. In addition to their stadium investments, the team has made philanthropic contributions, including a $1 million donation toward hurricane relief last November. As of now, no final timeline has been established for the proposal or public funding request. “I think it’s safe to say everyone wants this finalized sooner rather than later,” Poirrier said, “but there’s no definitive timeframe just yet.” Source: Tampa Bay Times Thank you for your interest. Have questions regarding the local market? Navigate the Real Estate Market with confidence, and contact us at Cliggitt Valuation for your appraisal, consulting, and valuation needs today. Mike Cliggitt, MAI, MRICS, CCIM 813.405.1705 | 863.661.1165 - Direct Lines findvalue@cliggitt.com Appraisal & Valuation Markets Questions about our blog? Contact our Director of Sales & Marketing, Sydney Avolt. Sydney Avolt 727.403.7418 - Direct Line sydney@cliggitt.com

Casual Eatery & Game Room, 1983, to open in former Datz and Dough in South Tampa

By cliggittvaluation • July 25, 2025
A well-known corner of South Tampa is getting a new lease on life. The property at 2616 S. MacDill Avenue —formerly home to the popular eateries Datz and Dough—is undergoing a complete transformation led by Three Oaks Hospitality. The new concept, 1983, is scheduled to open its doors in mid-August. Three Oaks, the hospitality and development group behind successful Tampa Bay ventures like Armature Works, The Pearl, Ciro’s, Steelbach, and Ro, acquired the site in 2023 and has since begun a creative reimagining of the space. The 150-seat restaurant will introduce a sports-forward, social dining experience with an upscale 1980s-inspired aesthetic. The adjacent Dough space will become a retro arcade, paying homage to iconic video games of the past—think Pac-Man and Galaga—while the restaurant itself will offer a menu that ranges from sushi and salads to French dips and classic wings. The design will incorporate vintage sports memorabilia and a preppy flair reminiscent of 1980s fashion and culture. The project’s name, 1983, reflects the birth year of twin brothers Charles and Kyle Bruck, co-founders of Three Oaks. One thing that isn’t changing? The landmark marquee sign out front, which locals may remember for its witty one-liners. It’s being preserved and will continue to feature playful messages as a nod to the building’s legacy. This revitalization adds to the continued momentum of redevelopment along the South MacDill corridor, a high-visibility commercial stretch in one of Tampa’s most established neighborhoods. Source: Tampa Bay Times Thank you for your interest. Have questions regarding the local market? Navigate the Real Estate Market with confidence, and contact us at Cliggitt Valuation for your appraisal, consulting, and valuation needs today. Mike Cliggitt, MAI, MRICS, CCIM 813.405.1705 | 863.661.1165 - Direct Lines findvalue@cliggitt.com Appraisal & Valuation Markets Questions about our blog? Contact our Director of Sales & Marketing, Sydney Avolt. Sydney Avolt 727.403.7418 - Direct Line sydney@cliggitt.com

Is Brightline Finally Coming to Tampa?

By cliggittvaluation • July 21, 2025
Tampa residents have been waiting for high-speed rail service—and it’s starting to look like that dream could eventually become a reality. Brightline, the private passenger rail company already operating in South Florida, is officially making moves toward a Tampa expansion. The company recently requested $400 million in bonds to fund new stations and tracks across Florida, with Tampa named as one of the next planned stops. That funding would help push forward rail infrastructure connecting Tampa to Orlando and beyond. So… when can we actually expect to ride? The Not-So-Soon Timeline According to Hillsborough County Transportation Planning Organization executive director Johnny Wong, we might still be waiting another decade. Yep—ten years. Wong’s projection is based on information from a former Brightline executive, now with the Orlando Economic Partnership, who noted that Brightline will need to lay new rail along I-4 before the Tampa link becomes a reality. And since I-4 is currently undergoing a massive expansion that could take up to 20 years to complete, rail construction might not begin for a while. That said, there’s some hope. Governor DeSantis and the Florida Legislature have shown interest in speeding up the I-4 project, which would naturally help accelerate Brightline’s expansion timeline as well. Why Now? Ever since Brightline opened its Orlando station in 2023 (connecting to Miami), the buzz around a Tampa extension has only grown. With Central Florida’s population booming and I-4 getting more congested by the day, many are pushing for a faster, less stressful travel alternative. Last year, Mayor Jane Castor even floated 2029 as a possible opening year for the Tampa station. And with the recent bond request and local support—including a unanimous vote from Tampa City Council to allow Brightline to proceed with financing—the wheels are certainly turning. But There’s a Catch While Brightline has ambitious plans, the company is facing some financial headwinds. It fell about 30% short of its projected ridership last year, carrying roughly 2.8 million passengers. That drop came after eliminating popular $10 commuter passes, though those have since been brought back—and early signs show ridership recovering in South Florida. Despite operating at a $63 million loss last year and carrying $5.5 billion in debt, Brightline continues to grow. And Tampa appears to be next in line. Where Will the Station Go? A final location hasn’t been publicly announced, but city officials have hinted at a site in Tampa’s “greater downtown area,” possibly stretching from Ybor City to the Curtis Hixon Waterfront Park area. In May, Hillsborough County asked residents how they would get to the future station, and the majority said they’d drive or use ride-share services. That means the city will likely need to build a parking structure and invest in safer pedestrian and bike-friendly infrastructure. Respondents also voiced a desire for more public transit near the station, which could reignite conversations about expanding the TECO Line Streetcar into Tampa Heights. What If Brightline Doesn’t Make It? Even with the financial risks, there’s a silver lining. If Brightline lays the rail but later backs out, the infrastructure could still be used by another operator—think Amtrak or even a local transit authority. As Wong put it: “If we have assets for trains to go through Tampa to Orlando, I don’t see why there wouldn’t be competitors in that space.” Source: Tampa Bay Times Thank you for your interest. Have questions regarding the local market? Navigate the Real Estate Market with confidence, and contact us at Cliggitt Valuation for your appraisal, consulting, and valuation needs today. Mike Cliggitt, MAI, MRICS, CCIM 813.405.1705 | 863.661.1165 - Direct Lines findvalue@cliggitt.com Appraisal & Valuation Markets Questions about our blog? Contact our Director of Sales & Marketing, Sydney Avolt. Sydney Avolt 727.403.7418 - Direct Line sydney@cliggitt.com
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