Welcome to Beyond the 10-Key, a regular article discussing powerful and unique ways to utilize AI in the tax, accounting, and financial services industry. With the influx of new AI-based platforms and the ease at which these tools can be used, hardly a day goes by where a typical conversation doesn’t migrate to how AI can improve our processes, client interactions, and more.
Topic: Using AI to Help Determine the Land and Structure Values of Investment Real Estate
I hear challenges and problems many other tax professionals face on a regular basis and one that I have heard recently is the struggle they, and their clients, face to determine the land value and structure value of an investment property they purchased. Sadly, this is information that is not typically provided at time of sale.
Firms attempts to research, but values are not always available. Some firms use a sketchy flat percent such as 25%, but that is rarely accurate and can drastically shift values. Investors and their tax professionals get stuck. There is no perfect solution.
One hurdle the prompt has to overcome is wording. Typically, land is an equalizing term, but then many use property, structure, improvements, or the similar - some even listing different values for each. Sadly, the data is not structured, but this is where an AI platform is able to apply logical reasoning and derive value.
In our firm, we use AI to conduct a review what information we have access to and, sadly, the information is typically lacking and that leaves a gap for our clients. We will then use the below process to determine split values. We have found, especially in cases where a value cannot be fully located (even when contacting the local tax assessment office!) that this value has been realistic. At the beginning of using this prompt, we would reach out to the local office again to determine reasonableness and unilaterally received acceptance.
The Basic Process
You can perform the similar analysis using the standard interface in ChatGPT, Gemini, CoPilot, or any of the dozens of other tools. No matter the tool or platform, the process is pretty much the same and this week is much simpler than last:
There is nothing we upload, but you could easily upload a PDF of the property and its description. Then, use a prompt similar to below. Note that the prompt will shift by platform and as new or different version are released. You should tweak and adjust to your needs.
Assuming the role of an experienced tax professional and accountant, you provide thorough analysis of financial review and specialize in real estate valuation.
I specialize in real estate investors as clients and my clients do not typically know the land value vs structure value of the new investment properties they purchase.
I have a client who purchased [Insert Full Address]. Research reference sites and local government sites, then determine the land and property/structure/improvement values for this investment.
Provide citations where possible. Please humanize all of your responses to a 10th grade level of comprehensive and speech. Additionally, think about your responses a second time prior to creation. Finally, if anything is unclear, please ask questions.
Given that we use an API, we format the returned response into a clean PDF for each client. You could simply modify the prompt to request the response in a formatted version to your layout and liking. And, obviously, once we receive the response, we still review it for accuracy (but that is a conversation for another day).
Sample Output
While the output is comprehensive, it is also, quite long. Here are some sample outputs you may receive:
Reminder that the prompt is thinking a second time:
Review Records
Provide Verification Options
Firm and Qualitative Findings
This is just partial output, but you can see the analysis is detailed and can provide significant insight.
What Would You Do?
We hope you are enjoying Beyond the 10-Key. Now, we would love to hear your thoughts? How would you adjust the prompt for your needs?
Thanks so much!
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