Fair Market Value for Mortgage Note

[Lewis Hunter]

Coming up on the first full year of owning a note in my SDIRA and I received a notice stating that

Each year, the Internal Revenue Service requires Fair Market Values be provided for assets in your Camaplan Self-Directed Individual Retirement (IRA), Health Savings (HSA), Coverdell ESA or Qualified Plan (QP) accounts.

Can anyone recommend a good appraiser? Also what is the typical going rate for this service? I was quoted $650 for the one note I own. Any feedback would be appreciated 👍

[Bill McCafferty]

@Drew Poniewaz

I can determine my FMV for Performing Notes three different ways:

#1. My SDIRA Custodian gives my Performing Notes a FMV based on what I purchase it for. As monthly payments come in from Borrowers they adjust the FMV by subtracting the principal portion of the payment from the existing FMV (or at least some percentage of the principal). So you can use that number until it gets to zero.

Then start using #2 or #3. You can also start with #2 or #3. All three have valid points to use for determining FMV for Performing Notes.

#2. Use the Notes UPB as the FMV.

#3. FMV is what you could sell the Performing Note for in the marketplace based on a buyer's expected Yield.

I would just be consistent in the method you use to determine the FMV. You just need to be able to explain how you determined the FMV.

With Non-Performing Notes you could base the FMV off of your Purchase Price or the Notes UPB. I Personally would use the Purchase Price to determine my FMV for Non-Performing Notes.