Date of Death Appraisals: Retrospective Valuations for Settling Estates

A Date of Death appraisal is a third-party, professional opinion of a property’s fair market value as of the day a person passed away. It is provided by a state certified real estate appraiser and follows the standards set by the Uniform Standards of Professional Appraisal Practice (USPAP). This type of appraisal is commonly used in estate and tax matters, such as inheritance tax filings, probate proceedings, or when determining a stepped-up cost basis for future capital gains calculations.

• Executors and estate administrators

• Probate attorneys and estate planners

• CPAs preparing Form 706 or gift/estate tax documents

• Heirs handling real estate distribution

• Anyone seeking to avoid IRS penalties or audit risk

Ideally, the appraisal should be completed as early as possible. In Pennsylvania, the inheritance tax return is due nine months after death (with a 5% discount if paid within three months). In New Jersey, the return is due eight months after death. Starting early allows time to meet these deadlines and make informed decisions about selling, retaining, or distributing the property. Most appraisals take one to two weeks to complete, so don’t wait until the last minute.

A Date of Death appraisal is used to establish the official value of a property for legal and tax purposes. It helps determine how much inheritance tax may be owed, supports accurate reporting to the IRS, and ensures fairness in distributing assets among heirs. It provides the most credible, defensible value opinion and protects executors from disputes or audits. Without it, families often rely on less accurate estimates, which can lead to costly mistakes or challenges later.

A formal appraisal is not legally required in either Pennsylvania or New Jersey. However, the estate must report a fair market value for the property as of the decedent’s date of death (or alternate valuation date, if properly elected). This value can sometimes be based on recent sales, a real estate agent’s CMA, or an online estimate, but these informal methods often lack credible support, and may not be accepted if the return is audited. A certified appraisal is the most reliable option, offering a clear, detailed, and defensible opinion of value that meets IRS and state standards.

Possibly, but it comes with risks. While a comparative market analysis (CMA) or online valuation tool may be acceptable in small or uncontested estates, these sources are often inaccurate, lack documentation, and don’t follow appraisal standards. They are more likely to be questioned by tax authorities or other parties involved in the estate. A certified appraisal offers a comprehensive, unbiased, and standards-compliant report that is far more likely to be accepted if the estate is audited or challenged.

Not automatically. If the sale occurred under normal market conditions, it might help support the value, but it doesn’t replace the need for a proper valuation. Sales that occur quickly, under pressure, or without full market exposure may not reflect the property’s fair market value as of the date of death. An appraisal ensures the valuation is based on market conditions at the appropriate time and provides clarity for tax and legal reporting.

Skipping the appraisal can create risk. You may end up overpaying taxes, underreporting value, or lacking documentation to support the stepped-up basis for capital gains purposes. If the estate is reviewed by the IRS or state, or if heirs disagree about property value, the lack of a certified appraisal can cause serious complications. A professional appraisal minimizes these risks and provides a strong layer of protection for executors and beneficiaries.