Stepped-Up Basis Appraisals

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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Pasco County Approves Expansion of The Grove at Wesley Chapel

By • September 15, 2025

Pasco County commissioners have approved a major residential expansion at The Grove at Wesley Chapel, reinforcing the growth of one of the area’s most dynamic mixed-use destinations. On September 2, commissioners voted to allow developer Mark Gold to add 275 additional apartment units, nearly doubling the community’s multifamily component from 300 to 575 residences. Transforming a Former Retail Center Since acquiring The Grove in 2019, Gold has reshaped the once-struggling retail center into a thriving hub anchored by the Krate container park, boutique retailers, restaurants, and entertainment venues. The addition of new apartments is the latest step in evolving the 165-acre property into a fully integrated live-work-play environment. The approved plan calls for four-story apartment buildings, integrated pedestrian connections, and a new park. Residents will have direct access to Krate and surrounding businesses, further driving foot traffic and supporting small local enterprises. Commissioners described the project as a “classic mixed-use development” that responds to shifting consumer and tenant demand. Addressing Infrastructure and Traffic Concerns While Commissioner Jack Mariano voiced concerns over congestion along Oakley Boulevard, the main access road, other commissioners pointed to ongoing infrastructure improvements—including the widening of Old Pasco Road—as a sign that capacity is keeping pace with development. Additional pedestrian safety measures, such as new crosswalks and stop signs, were also included in the approval. Beyond Apartments: What’s Next for The Grove Although multifamily is taking the spotlight, questions remain about the use of The Grove’s 500,000 square feet of office entitlements, which have not yet been exercised. Commissioners emphasized the importance of adding employment opportunities to balance the project’s residential and retail growth. Gold has committed 1,000 square feet to a co-working space, reflecting demand from remote workers, and noted that hotel development is also underway, with letters of intent already signed for 120 rooms. Remaining entitlements include 50,000 square feet of retail and additional acreage along Old Pasco Road. A Model for Suburban Redevelopment The Grove’s continued evolution highlights a broader trend in the Tampa Bay area: the repositioning of aging retail centers into mixed-use, experience-driven destinations. As national retailers close and consumer behavior shifts, developers are integrating housing, entertainment, and co-working concepts to create sustainable long-term value. Commissioner Seth Weightman summed it up: “If it was ever an appropriate place in this county to have multifamily, this is it.” 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

USF Trustee's Vote to Advance New Mixed-Use Fletcher District

By • September 9, 2025

The University of South Florida is moving forward with plans for a major mixed-use development on its Tampa campus known as the Fletcher District. Earlier this month, the university’s trustees approved the concept, and the proposal is now heading into a 90-day review process with the City of Tampa, Hillsborough County, and other local agencies. If approved by the Board of Governors in November, construction could begin as early as next year, with a second public hearing scheduled for December 10. The first phase of the Fletcher District will transform 27 acres into a combination of student and multifamily housing, a hotel and conference center, retail and dining options, green spaces, and a new academic building. Developers may also add an additional 20 acres of cottage-style family housing depending on early demand. The project is being structured as a public-private partnership, meaning USF’s direct financial role will be limited to the academic building and its share of infrastructure improvements. This site has been the focus of debate in recent years, as nearby residents previously pushed back on development proposals tied to land along Fletcher Avenue containing wetlands and sandhill preserves. In 2023, USF President Rhea Law designated the Forest Preserve as undevelopable and closed the university golf course adjacent to it. The current plan emphasizes preservation by including wildlife buffers, native vegetation restoration, and stormwater management systems designed to complement the natural environment. A full traffic analysis is also underway to address concerns about congestion along Fletcher Avenue. Reactions to the plan have been mixed. Student leaders see the Fletcher District as a “win-win” for the university and the broader community, citing the addition of much-needed housing and economic activity. Trustees have expressed optimism about the project’s potential to enhance campus life, with suggestions for public artwork and other landmarks in the green space. Local residents, however, remain concerned about flooding, runoff, and increased traffic in the surrounding neighborhoods. Some fear the project could overwhelm nearby infrastructure, though university officials say they are committed to working within all environmental and regulatory requirements. From a valuation perspective, the Fletcher District represents a significant shift in the development landscape around USF. Large-scale mixed-use projects of this nature often set new benchmarks for rent levels, absorption rates, and market expectations. The addition of multifamily housing, hospitality space, and retail could create ripple effects across adjacent submarkets, while the public-private structure introduces unique considerations for land valuation and long-term lease structures. As details continue to emerge, appraisers, investors, and property owners alike will be watching closely to see how this project influences growth and value in the area. 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

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