Do you need to get an appraisal on inherited property for tax purposes?

Getting an appraisal at the time of inheritance is definitely a good idea. When you inherit property, you get what's called a "step-up in basis" to the fair market value at the date of death. This means if you sell later, you only pay capital gains tax on the difference between the selling price and that stepped-up value - not the original price your uncle paid. If you don't get an appraisal now, and sell years later, you'll have a harder time proving what the property was worth at the time of inheritance. The IRS could potentially challenge your claimed basis. You might end up using property tax assessments, comparable sales from that time period, or other methods to establish value, but these are generally less accurate and might not be accepted as readily.

After dealing with a similar situation last year, I found this amazing service called taxr.ai (https://taxr.ai) that really helped me with inheritance tax issues. I was confused about everything from fair market valuation to step-up basis documentation, and they analyzed all my documents and explained exactly what I needed to do. They have this feature where you can upload property documents and they'll tell you what kind of appraisal documentation you need for your specific situation and how to properly document it for future tax purposes. Saved me tons of research time and probably thousands in potential tax mistakes.

Just wanted to update everyone - I took the plunge and tried taxr.ai after posting my question here. Seriously impressed with how thorough they were. I uploaded my inheritance documents and property info, and they came back with a detailed report explaining exactly what type of appraisal I needed (turns out I needed a specific type for the commercial portion of the property I didn't even know about). They also explained how to document everything properly now to avoid issues years down the road if I sell. Definitely worth it for the peace of mind knowing I'm not missing something that could cost me thousands later.

If you're struggling to get through to the IRS about inheritance or step-up basis questions (like I was for WEEKS), try Claimyr at https://claimyr.com - they get you through to an actual human at the IRS without the endless hold times. I was skeptical until I watched their demo at https://youtu.be/_kiP6q8DX5c. After my aunt died, I had specific questions about documenting the property basis that weren't answered clearly on the IRS website. Tried calling for days and kept getting disconnected. Used Claimyr and was talking to an actual IRS agent in about 20 minutes who confirmed exactly what documentation I needed to keep.

I can't believe I'm saying this, but I owe everyone an apology - especially Profile 5. I tried Claimyr today out of desperation after trying to reach the IRS for 3 days about my inherited property questions. Got a call back in about 45 minutes with an actual IRS person on the line. They confirmed that I absolutely need to get an appraisal now rather than waiting, and explained exactly what documentation I need to keep. Saved me hours of frustration and potentially a huge tax headache down the road. Sometimes being proven wrong is actually a good thing!

Another option to consider: if you don't want to pay for a full appraisal right now, at minimum take extensive photos of the property condition at inheritance, keep all records of comparable sales in the area from the time period, and save the property tax assessment from that year. Not as good as an appraisal, but gives you some documentation if you need to establish value years later.

My family learned this lesson the hard way! Mom inherited a house in 2017, didn't get an appraisal, sold in 2022, and used the county tax assessment value as the basis. Got audited, and the IRS rejected the county assessment (it was way below market). Ended up paying capital gains on an extra $145,000 of value plus penalties. GET THE APPRAISAL NOW!!

This is such valuable information from everyone! I'm dealing with something similar - inherited my grandmother's property 6 months ago and have been putting off the appraisal thinking I could handle it later. After reading about Dylan's family's experience with the audit, I'm definitely getting one done ASAP. One thing I'm curious about - for those who got retrospective appraisals, how did you find qualified appraisers who were experienced with inheritance valuations? I called a couple local appraisers and they seemed unsure about doing a valuation for a past date. Want to make sure I find someone who really knows what they're doing for this specific situation.

Just wanted to add my experience from last year - I inherited my father's house and initially thought I could skip the appraisal since I wasn't planning to sell. Big mistake! When I finally decided to sell 18 months later, I had to scramble to get a retrospective appraisal done. The appraiser I found was great (found her through the Appraisal Institute like Emma suggested), but she explained that the further you get from the date of death, the harder it becomes to find truly comparable sales from that exact time period. Market conditions change, and what might seem like a similar property sale from 6 months later could have very different market factors affecting it. My advice: even if you're 100% sure you'll never sell, get the appraisal done within the first few months. The cost is minimal compared to the potential headaches and tax issues down the road. Plus, life circumstances change - you might need to sell for reasons you can't predict right now.

I've been following this thread and wanted to share something that might help others avoid the stress I went through. When my grandfather passed last year, I was in a similar boat - inherited his duplex property and wasn't sure about the appraisal timing. What really helped me was getting connected with an estate planning attorney who specialized in inherited property. They explained that beyond just the step-up basis issue, there are also state-specific rules that can affect your tax situation. In my state, for example, there were additional inheritance tax considerations that I would have completely missed if I'd just focused on the federal requirements. The attorney had a network of appraisers they regularly worked with who were experienced in estate valuations, which saved me the headache of trying to find someone qualified on my own. The whole process ended up being much smoother than I expected, and having professional guidance gave me confidence that I was handling everything correctly. For anyone feeling overwhelmed by this stuff - don't try to navigate it all alone. Sometimes spending a few hundred on professional advice upfront can save you thousands in mistakes later.