Date of Death Appraisals for Estate & Tax Purposes

The “Step-Up in Basis”

Normally, if someone buys a property for $200,000 and later sells it for $900,000, the taxable gain is based on the increase from the original purchase price. But when property is inherited, U.S. tax law generally gives the heirs a “step-up” in cost basis — the heir’s new tax basis becomes the property’s market value on the date of death, not what the deceased originally paid for it.

• Parent bought home in 1991 for $200,000
• Property value on date of death (2022) $900,000
• Heir sells property in 2025 for $975,000
• Without a date of death appraisal — Taxable gain = $775,000
• With a stepped-up appraisal — Taxable gain = $75,000 (before consideration of selling costs and improvements)

A Date of Death Appraisal can save the heir hundreds of thousands of dollars in capital gains tax.

Why a Certified Appraisal Is Important

A professionally prepared Date of Death Appraisal provides credible documentation of the property’s fair market value as of the exact effective date required for tax and estate purposes. These appraisals are commonly used by estate attorneys, CPAs, executors, trustees, heirs, and beneficiaries. A properly supported appraisal may help:

• Establish a defensible stepped-up tax basis
• Support IRS reporting requirements
• Assist with estate settlement and asset distribution
• Reduce disputes among heirs or beneficiaries
• Provide documentation in the event of an audit

Retrospective Valuation Expertise

Date of Death Appraisals are retrospective appraisals, meaning the valuation is performed as of a prior historical date rather than the current market date. This process requires extensive research and analysis of historical comparable sales, market conditions existing at the time, economic trends, neighborhood influences, and property-specific characteristics relevant on the effective date — without influence from future market appreciation or hindsight.

When Is a Date of Death Appraisal Needed?

A Date of Death Appraisal is commonly required when:

• Inherited property is being sold
• An estate is being settled
• A trust contains real estate assets
• Heirs need to establish tax basis
• Estate or tax attorneys request valuation documentation
• Property ownership is being transferred among beneficiaries

Even if several years have passed since the date of death, a retrospective appraisal can still be completed using historical market data and archived comparable sales.