Step-Up in Basis: What CPAs Need From a Date of Death Appraisal

Why Basis Starts With Value

Under IRS rules, the basis of inherited property is generally its fair market value on the date of the decedent's death. When heirs later sell, gain is usually measured from that value. A credible, well-supported appraisal gives the CPA a documented starting point instead of an estimate pulled from a listing site.

Retrospective, Not Current

The appraisal is retrospective: the inspection may happen months later, but the value is stated as of the date of death. Comparable sales and market conditions are selected from around that date. Make sure the engagement clearly states the effective date and the intended use.

What to Ask For in the Engagement

A few details up front save revisions later.

• Effective date equal to the date of death (or alternate valuation date, if your client elects it)
• Intended use stated as estate, trust or tax purposes
• Intended users named, such as the trustee, executor and CPA
• Notes on condition changes or repairs made after death
• A licensed California appraiser's signed report

Common Pitfalls We See

Using an online estimate or broker opinion, valuing the home as it looks today after heirs have renovated or cleared it, and waiting until a sale is closing are the most frequent problems. Ordering the appraisal early keeps options open for your client.

Your Call on the Tax Treatment

We provide the value; the CPA and attorney decide how it is reported. Rules such as community property treatment and alternate valuation dates should be confirmed by the client's tax adviser.

Work With a Family-Run Appraiser

Mallinson Home Appraisers has completed date of death appraisals for Southern California CPAs and estate attorneys since 1979, serving Orange County from Dana Point and Los Angeles County from Long Beach. Call 949.241.0310 to refer a property.