Date of Death Appraisal

What Is a Date of Death Appraisal?

When a loved one passes away, settling the estate often requires a real estate appraisal to determine the fair market value of the property as of the date of death.

This is called a Date of Death Appraisal, and it plays a vital role in probate, estate planning, and IRS tax reporting. It is also commonly referred to as a:

Retrospective Appraisal
Inheritance Appraisal
Estate Appraisal
Historical Appraisal
Probate Appraisal

These appraisals are typically requested by estate attorneys, CPAs, trustees, or heirs.

Why the Step-Up in Basis Matters

One of the most important reasons to get a Date of Death Appraisal is to establish the step-up in basis, which can significantly reduce capital gains taxes when an inherited property is sold.

What Is the Step-Up in Basis?

When real estate is inherited, the IRS allows the cost basis (used to calculate taxable gains) to “step up” to the fair market value as of the date of death — instead of using the original purchase price.

This can mean major tax savings when the property is eventually sold.

Example: Why a Date of Death Appraisal Matters

Let’s say your parent bought a home in 1990 for $200,000.
They passed away 3 months ago, and I was hired to complete a Date of Death Appraisal.
The home was valued at $1,000,000 as of that date.
You sell the home shortly after for $1,050,000.

With the appraisal:

The stepped-up cost basis is now $1,000,000
Your taxable gain is only $50,000 (the difference between sale price and new basis)

Without the appraisal:

The IRS might default to the original purchase price of $200,000
Your taxable gain could be calculated as $850,000
That could result in a much higher capital gains tax bill

A proper Date of Death Appraisal protects your heirs from overpaying taxes and ensures full compliance with IRS and probate requirements.