Common questions about date-of-death appraisals, step-up in basis, and our desktop appraisal process.
Looking for a deeper explanation of the step-up in basis, IRS requirements, and California’s community property rules? See our Step-Up in Basis Guide.
A date-of-death appraisal establishes the fair market value of real estate as of the date a property owner passed away. Under federal tax law (IRC §1014), this value becomes the new cost basis for the property — replacing the original purchase price. This applies whether the property is fully inherited or co-owned, such as when one spouse passes away and the surviving spouse retains the home.
The appraisal uses comparable sales and market data from around the date of death to determine what the property would have sold for on that specific date. By documenting this value, the appraisal can eliminate or significantly reduce capital gains taxes on decades of appreciation when the property is eventually sold.
When a property owner dies, their heirs receive the property at its current market value rather than the original purchase price. Under federal tax law (IRC §1014), this “step-up” eliminates capital gains tax on appreciation that occurred during the decedent’s lifetime.
Example: A home purchased for $150,000 in 1990 is worth $900,000 at the date of death. Without the step-up, selling the home would trigger capital gains tax on $750,000 of appreciation. With a date-of-death appraisal establishing the $900,000 basis, that tax liability is eliminated.
In California, community property rules can provide a double step-up — both halves of a jointly owned property receive the new basis when one spouse passes.
Whenever a property owner passes away, a date-of-death appraisal should be obtained to establish the property’s value at the time of their passing. This includes situations where the deceased was one of multiple owners — for example, when one spouse dies and the surviving spouse keeps the home. Without an appraisal documenting the value at that moment, the family risks losing the ability to prove a higher cost basis, which means paying more in capital gains taxes when the property is eventually sold.
The most common situations include:
There is no deadline for ordering the appraisal, but it is easier and more straightforward when the property has not changed significantly since the date of death.
We have prepared retrospective appraisals for dates of death going back more than 40 years. As long as adequate sales data exists for the time period, a credible valuation can be developed. Older dates of death may require more research time but are not inherently less reliable.
The standard valuation date is the date of death. However, under IRC §2032, executors of taxable estates (those exceeding the federal estate tax exemption, approximately $13 million per individual) may elect an Alternate Valuation Date exactly six months after the date of death.
This election is only available when it would both decrease the gross estate value and decrease the estate tax liability. It cannot be used for estates below the exemption threshold.
The decision involves a strategic trade-off: choosing the alternate date typically lowers the immediate estate tax burden (taxed at approximately 40%), but it also lowers the heir’s stepped-up basis, increasing their future capital gains exposure (taxed at up to 20%) when the property is eventually sold. Executors of large estates should work with their CPA or estate attorney to model both scenarios before making this irrevocable election.
We can appraise as of either date. If you need both, let us know when ordering.
When inherited property is sold, the title company reports the sale proceeds to the IRS on a Form 1099-S. If the heir claims a stepped-up basis on their tax return (Form 8949) but has no qualified appraisal to support it, the IRS can generate an automated notice challenging the claimed basis.
Without a USPAP-compliant retrospective appraisal to substantiate the date-of-death value, the IRS has the authority to deny the step-up entirely. This can result in capital gains tax on the full historical appreciation — potentially decades of price growth — plus accuracy-related penalties of 20% and compounding interest.
A qualified date-of-death appraisal is the documentation that backs up the basis you claim. It is the difference between a defensible tax position and one that does not hold up under scrutiny.
The appraisal must reflect the property’s condition on the date of death, not its current state. If heirs have renovated, repaired, or cleared out the property since the date of death, the appraiser uses supplementary evidence to reconstruct the home’s prior condition.
To help us develop an accurate retrospective valuation, provide whatever you can from the following:
Transparency is critical. The appraiser uses this evidence to mathematically separate the property’s value on the date of death from the value added by subsequent improvements. Don’t let post-death renovations stop you from ordering — we handle this regularly.
The IRS requires a “qualified appraisal” performed by a “qualified appraiser” as defined under federal regulations (26 CFR §1.170A-17). This means the appraisal must be USPAP-compliant, prepared by a state-licensed or certified appraiser with relevant education and experience, and signed with a declaration acknowledging the appraiser’s responsibilities under federal tax law.
Automated valuation models (Zillow Zestimate, Redfin Estimate, etc.) and Broker Price Opinions (BPOs) from real estate agents do not meet these standards. They are not USPAP-compliant, they are not signed by a qualified appraiser, and they cannot establish a defensible cost basis for IRS purposes.
If the IRS questions your claimed basis and your only documentation is an online estimate or an agent’s informal opinion, you have no legal defense for the step-up. A qualified appraisal is the only instrument the IRS accepts.
The tax forms depend on the size of the estate:
In both scenarios, the date-of-death appraisal is the foundation of the heir’s tax position.
Yes. If a beneficiary believes the date-of-death appraisal is too low (which would limit their step-up and increase future capital gains) or too high (which could inflate estate taxes), they have the right to commission a second, independent qualified appraisal for review.
The secondary appraiser examines the comparable sales, adjustments, and methodology used in the original report to determine whether it accurately reflects the property’s market value on the date of death. This secondary evidence can be presented to the executor, trustee, or tax preparer to request a revision before tax returns are finalized.
Every appraisal we produce is backed by a complete workfile containing the full analysis, market data, comparable sales research, and supporting documentation used to develop the value conclusion. This workfile is maintained regardless of whether you order a Standard or Basic report, and it is available to support the appraisal if it is ever examined.
We are willing to defend our valuations if questioned by the IRS. While none of our date-of-death appraisals have been challenged in an audit, we regularly serve as an expert witness in litigation, divorce, bankruptcy, and mediation proceedings, and have served as a consultant in the review and rebuttal of opposing appraisal work. That experience in contested proceedings — where appraisals are examined by opposing counsel, judges, and other appraisers — speaks to the level of scrutiny our work is prepared to withstand.
Yes. We work with CPAs and estate attorneys regularly and are happy to coordinate as needed. The most common form of coordination involves signing fair market value (FMV) forms the CPA has prepared, which we include as part of the appraisal fee at no additional charge.
If additional consulting is needed beyond that — for example, providing supplemental analysis or participating in discussions about valuation methodology — we are happy to accommodate, though depending on the scope there may be a separate fee.
Yes. The IRS requires a "qualified appraisal" performed by a "qualified appraiser" (IRC §170). The regulations specify qualifications for the appraiser and content requirements for the report — they do not mandate a specific methodology or require physical inspection.
Both our Standard and Basic tiers meet these requirements and are USPAP-compliant.
Yes to both. Every appraisal we produce — Standard and Basic tier alike — is prepared in full compliance with the Uniform Standards of Professional Appraisal Practice (USPAP), the nationally recognized ethical and performance standards for the appraisal profession. Each report is certified and signed by a California Certified Residential Appraiser (License No. AR036053), meaning the appraiser has met the state’s education, experience, and examination requirements and is subject to ongoing regulatory oversight by the Bureau of Real Estate Appraisers (BREA).
The only difference is how the subject property's physical characteristics are documented. In a traditional appraisal, the appraiser visits the property. In a desktop appraisal, the client provides photos and property information.
The analytical core — selecting comparable sales, making adjustments, analyzing market conditions, and developing a value opinion — is identical. Comparable sales are always analyzed remotely, never physically inspected, regardless of appraisal type. A desktop appraisal is not less thorough in terms of the analysis itself, and it carries the same credibility as a traditional appraisal when supported by credible photographs of the property.
With good, representative photos, both approaches produce the same reliable value conclusion. The difference is in how the property’s physical characteristics are observed — not in the quality or depth of the valuation work.
Yes. The same analysis of market conditions, comparable sales, adjustments, and all other factors that determine the value conclusion is performed for every appraisal, regardless of tier. The analytical methodology is identical — both tiers produce the same reliable value conclusion.
The difference is in how much of that analysis is presented in the final report. The Standard Desktop includes maps, comparable sale photographs, a market conditions section, a property description, and a property history report. The Basic Desktop presents the value conclusion and comparable sales analysis in a streamlined format, omitting those supplemental sections.
Importantly, the full analysis — including market conditions research and all supporting data — is maintained in the appraiser’s workfile. If the appraisal is ever examined in an audit, that workfile is available to support the value conclusion with the same depth of documentation as a Standard report.
We stand behind our work. If the appraiser misinterprets the property's condition, quality, or features based on the photos and data provided, the appraisal will be revised at no additional cost.
No. Under professional appraisal standards (USPAP), every appraisal is prepared for a specific client and a specific purpose — and those cannot be changed after the fact. In a mortgage appraisal, the client is the lender, not the borrower, even though the borrower typically pays for it. Because of this, mortgage lenders will not accept an appraisal that was ordered by someone other than the lender themselves.
In many cases, they are more accurate. Mortgage appraisals are subject to lender underwriting guidelines that can limit the appraiser’s analysis in ways that have nothing to do with accuracy. These rules exist so that loans can be packaged and sold to investors with a predictable risk profile — not to produce the most precise valuation.
For example, underwriting guidelines may prevent the appraiser from using an older sale that is the best evidence of a feature’s value, or may cap the size of adjustments, forcing the appraiser to call a clearly superior comparable “equal” to the subject. The result can be a value that is higher or lower than it should be — not because the data is wrong, but because the rules limited how the appraiser could use it.
Our appraisals are not subject to lender underwriting constraints. The appraiser is free to use the best available data and apply professional judgment without artificial limits, which generally produces a more reliable opinion of value.
We generally do not recommend a desktop appraisal when the property value will be used to divide assets among estate beneficiaries who may disagree about the home’s worth. In that situation, a beneficiary who is unhappy with the appraised value may point to the absence of a physical property inspection to challenge the report’s credibility.
That argument does not hold up under professional appraisal standards — USPAP-compliant desktop appraisals are analytically equivalent to traditional appraisals — but we understand that the optics of a desktop report can become a source of friction for parties who are unfamiliar with the methodology. When the goal is consensus among beneficiaries rather than tax compliance, a traditional appraisal with a physical inspection may carry more perceived weight and reduce the potential for disputes.
If you’re unsure whether a desktop appraisal is the right fit for your situation, reach out and we’ll help you decide.
Our desktop appraisals have been used for bankruptcy proceedings, immigration applications, divorce settlements, and other situations that require a professional real estate valuation. However, our area of expertise is the date-of-death valuation and the IRS step-up in basis.
If you need an appraisal for a purpose other than date-of-death, we are happy to prepare one — but we cannot guarantee that it will satisfy the specific requirements of your situation. Courts, agencies, and opposing parties may have their own standards for what constitutes an acceptable appraisal, and those requirements can vary widely. We recommend confirming with your attorney, CPA, or the requesting party that a desktop appraisal will be accepted before placing your order.
You can select “Other” as the purpose on the order form and describe your specific need.
Most appraisals are completed within 5–7 business days after we receive your photos and property information. Complex properties or dates of death requiring extensive historical research may take longer.
All 58 California counties. Desktop appraisals eliminate geographic limitations — the analytical work is performed using MLS data, public records, and market databases that cover the entire state.
Single-family residences and condominiums (including PUDs). We do not cover commercial properties, 2–4 unit income properties, apartment buildings, or vacant land.
We need photos showing the property's condition at or near the date of death:
Smartphone photos are fine. If the property has changed since the date of death, describe what's different and we'll adjust accordingly.
Yes. If you start with a Basic report and later need the Standard format, you can upgrade by paying the price difference. The analytical work carries over — we expand the report format without redoing the valuation.
Each property requires its own separate order and receives its own independent appraisal. We handle multi-property estates regularly and are experienced at managing large batches with consistent methodology.
For multi-property orders, the turnaround time for the full batch will be longer than a single appraisal. As a general guideline, expect the base turnaround time for a single order plus an additional 10–14 business days for the completion of the remaining properties, depending on the total number.
Discounts may be available depending on the similarity of the properties. For example, if more than one property is the same model within a condominium complex, or if physical inspections (for traditional appraisals ordered through brianward.com) can be scheduled consecutively on the same day, the reduced research or travel time may be reflected in the fee. We also offer a 5% discount for cash-equivalent payment options such as a check or Zelle.
Payment is collected prior to the completion of the appraisals, which places the order in the queue. If you have several properties to appraise, use our contact form to let us know — we’ll help coordinate the process and provide individual quotes.
The completed appraisal is delivered as an Adobe Acrobat PDF file sent to the email address you provide. You can forward it directly to your CPA, attorney, or trustee.
Printed copies are not included with the appraisal fee. If you need a physical copy, we can prepare and mail a black-and-white printed version for $40 per report. You will need to review the PDF version first and confirm that the appraisal is final before a printed copy is sent. Just let us know when placing your order or use the contact form to request one after delivery.
California is a community property state. When one spouse dies, both halves of community property receive a step-up in basis — not just the decedent's half. This "double step-up" can significantly reduce capital gains tax when the surviving spouse sells.
Example: A couple bought a home together for $200,000. At the first spouse's death, the home is worth $1,000,000. In a common law state, only the decedent's half ($500,000) would receive the step-up. In California, the entire $1,000,000 becomes the new basis.
Proposition 19, effective February 16, 2021, fundamentally changed how inherited California properties are reassessed for property tax purposes. While it does not change the date-of-death appraisal itself (which establishes fair market value for income tax and step-up in basis purposes), it makes the appraisal far more consequential.
Non-primary residences (rentals, second homes, commercial): Prop 19 completely eliminated the reassessment exclusion for inherited property that is not the transferor’s primary residence. Inherited rental properties and second homes are now fully reassessed at current market value on the date of death. For properties held for decades under Proposition 13, this frequently results in property tax increases of 500% to 1,000%. The date-of-death appraisal establishes this new tax baseline.
Primary residences: Even for the family home, Prop 19 imposes strict conditions. The inheriting child must establish the property as their own primary residence within one year, and the exclusion is capped at the prior assessed value plus approximately $1,044,586 (adjusted biennially for inflation). If the date-of-death market value exceeds this threshold, the property faces a partial reassessment on the excess.
Example: A family home in San Diego has a Prop 13 assessed value of $200,000. The date-of-death appraisal determines the market value is $1,600,000. The excluded limit is $200,000 + $1,044,586 = $1,244,586. The excess is $355,414. The new property tax base becomes $555,414 — nearly triple the original assessment. To claim even this partial exclusion, the heir must file Form BOE-19-P with proof of residency within one year of the date of death.
Because the date-of-death appraisal directly determines the reassessment calculation, an accurate valuation is critical for both the step-up in basis and the property tax outcome.