The Date-of-Death Valuation

For tax and estate purposes, an inherited home is valued at its fair market value on the date the owner died. This is called the date-of-death valuation and it establishes the stepped-up basis — the cost basis used to calculate capital gains when you eventually sell.

How the Appraisal Works

A licensed real estate appraiser conducts a formal appraisal of the property as of the date of death. The appraiser:

• Inspects the property (or reviews records if a physical inspection isn't possible)
• Analyzes comparable sales in the area around the date of death
• Accounts for the property's condition, size, location, and features
• Produces a written appraisal report with a certified value

Why the Date-of-Death Appraisal Matters

• Tax basis — Establishes your stepped-up basis, minimizing capital gains tax when you sell
• Estate inventory — Required for the probate court's inventory of estate assets
• Fair distribution — Ensures heirs receive equitable shares if the estate includes multiple assets
• Pricing for sale — Provides a starting point for pricing the property

Retrospective Appraisals

If the appraisal wasn't done at the time of death, a licensed appraiser can conduct a retrospective appraisal — valuing the property as of a past date using historical market data. This is common when heirs don't immediately realize an appraisal is needed.

Current Market Value vs. Date-of-Death Value

The date-of-death value is used for tax purposes. When you're ready to sell, the current market value (what buyers will pay today) is what matters for pricing. If the market has changed significantly since the date of death, the two values may differ substantially.

Getting a Cash Offer

A cash offer from a buyer gives you a real-world data point on what the property is worth in its current condition. This complements the formal appraisal and helps you make an informed decision about whether to sell and at what price.