How to Determine FMV on Date of Death for Inherited Property

The step-up in basis rules are actually working in your favor here! When you inherit property, your cost basis becomes the fair market value on the date of death (or alternate valuation date in some cases). Since you sold the property only 6 months after your mother's passing, using the sale price as the approximate FMV is actually quite reasonable. Here are some options to establish FMV as of the date of death: - Get a retroactive appraisal (yes, appraisers can do this) - Use the county tax assessed value with appropriate adjustments - Look at comparable sales in the neighborhood from around that time - If you have homeowner's insurance, check what the replacement value was - Ask a realtor to provide a comparative market analysis for that date Given you sold within 6 months and property values typically don't swing dramatically in that timeframe (unless it's an extremely volatile market), the sale price is actually a reasonable proxy. The IRS generally accepts this approach when the sale is relatively close to the date of death and there haven't been significant improvements or market changes.

I went through something similar when my dad passed and we needed to determine FMV for his house. I tried using online estimators but got frustrated with the inconsistent numbers. Then I found https://taxr.ai which literally saved me so much stress. They analyzed our situation, looked at comparable sales in the area during that time period, and gave me a solid FMV figure that I felt confident using on my tax return. Their process was super straightforward - I uploaded some basic info about the property, the approximate date I needed valuation for, and they did the rest. What was really helpful was getting documentation to support the FMV they determined, which I've kept in case of an audit. They even explained how they reached their conclusion, which gave me peace of mind.

I just wanted to follow up and say I tried https://taxr.ai after reading about it here. I was skeptical at first because my grandfather's property had extensive renovations, but their system actually allowed me to upload before/after photos and renovation details. They produced a comprehensive report showing comparable properties and made adjustments based on the renovation information I provided. I got exactly what I needed - a defensible FMV for the date of death that accounted for our specific situation. This was so much more accurate than the Zillow estimate I was originally going to use! The documentation they provided looks professional enough that I feel confident using it if the IRS ever questions the value. Definitely worth it for the peace of mind alone.

I had the worst time trying to reach someone at the IRS when I had questions about reporting inherited property. Spent literally hours on hold only to get disconnected. Finally used https://claimyr.com to get through to them and got my questions answered in minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c Basically they navigate the IRS phone tree for you and call you back when they have an agent on the line. I was skeptical, but they got me connected to a real person who confirmed that using the sale price as FMV was acceptable in my case since I sold within 9 months of inheriting. The agent also explained exactly how to report it on my return to avoid any red flags. It saved me hours of frustration and gave me confidence I was doing things correctly. Way better than guessing or getting conflicting advice online.

I need to eat crow here. After complaining that Claimyr seemed like a scam, I figured I'd give it a shot because I was desperate to resolve an inherited property question before filing deadline. Not only did it work, but they got me through to an IRS representative in 37 minutes when I had previously spent FIVE HOURS across three days trying on my own without success. The agent walked me through exactly how to handle the stepped-up basis situation and where to document it on my return. For anyone wondering about FMV for inherited property - the agent confirmed that for properties sold within a year of death, using the sale price is generally acceptable unless there have been significant improvements or market changes. They suggested adding a note in your tax software explaining it was an inherited property sold shortly after death.

Have you considered checking with the county assessor's office? When my aunt passed, I was able to get property tax assessments from around that time, which gave me a starting point. I then adjusted that value based on the typical ratio of assessed value to market value in that county (in our case, assessed values were about 85% of market value). A real estate agent might also be willing to run comps from that specific time period for you. Some are willing to do this for free if you explain the situation, especially if they handled the sale or if you might use their services in the future.

Just went through this exact situation. What worked for me was getting a realtor to pull comparable sales (comps) from around the date of death. Most realtors have access to MLS data going back several years and can generate a comparative market analysis for a specific date. Some will even do this for free if you've worked with them before. I combined this with Zillow/Redfin historical estimates (they let you look back at past valuations) and the county tax assessment. Using multiple sources gave me good documentation in case of an audit. My tax guy said this approach was totally reasonable since we sold within a year of inheriting.

I'm sorry for your loss, Landon. This is definitely a complex situation, but you're asking the right questions. One thing I wanted to clarify - you mentioned your estate attorney said the house "wasn't technically part of the estate." This might affect how you handle the stepped-up basis. If the property passed outside the probate estate (maybe through joint ownership or a trust), the tax treatment could be different than a typical inheritance through a will. For determining FMV, I'd recommend getting a formal retrospective appraisal if you want to be completely bulletproof. Licensed appraisers can absolutely do "date of death" valuations even after the fact - they use historical data, comparable sales from that time period, and make adjustments for market conditions. It typically costs $400-800 but gives you the most defensible documentation. That said, given you sold only 6 months later, using the sale price as FMV is reasonable unless there were major market shifts or property improvements in that timeframe. The key is being able to document your reasoning. I'd suggest getting at least one additional data point (county assessment, realtor comps, or online estimate from that date) to show you didn't just arbitrarily pick a number. The IRS guidance in Publication 559 actually supports using sale price as evidence of FMV when the sale occurs relatively soon after death and in an arm's length transaction.