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.

I'm going through a very similar situation right now with my father's property, and I wanted to share what I've learned from working with a tax attorney on this. The key thing to understand is that the stepped-up basis rule (IRC Section 1014) is specifically designed for situations like yours. When you inherit property, your basis becomes the FMV as of the date of death, which effectively eliminates any capital gains that accrued during the decedent's lifetime. For establishing FMV, the IRS doesn't require a formal appraisal unless you're filing Form 706 (estate tax return), which you mentioned you won't be doing. Treasury Regulation 20.2031-1(b) actually states that FMV is "the price at which the property would change hands between a willing buyer and willing seller" - and a sale 6 months later is pretty strong evidence of that value. Here's what my attorney recommended for documentation: 1. Keep records showing the property was inherited (will, probate documents, etc.) 2. Document that the sale was at arm's length (no special relationship with buyer) 3. Note any significant changes between date of death and sale date 4. Keep a brief memo explaining your valuation method If you want additional support, you could get a realtor to pull comps from around the date of death, but honestly, with a 6-month timeline and no major market shifts or property improvements, using the sale price is well within acceptable practice. The fact that your basis and sale price are similar is actually exactly what Congress intended with the stepped-up basis rules - it prevents taxation on appreciation that occurred during the previous owner's lifetime.

I'm really sorry for your loss, Landon. Dealing with tax matters while grieving is never easy. Based on what you've described, you're actually in a pretty good position. The stepped-up basis rules are designed exactly for situations like yours, and using the sale price as your FMV is completely reasonable given the 6-month timeframe. Here's what I'd recommend to feel more confident about your approach: 1. **Document your reasoning** - Create a simple one-page summary explaining that you used the sale price as FMV because the property was sold within 6 months of inheritance with no major improvements or market changes. 2. **Get one additional data point** - Even something as simple as checking what Zillow showed for that property around the date of death, or asking a realtor friend to pull a quick comp analysis. This shows you didn't just arbitrarily pick a number. 3. **Keep good records** - Save the will, any probate documents, the purchase agreement, and your documentation of how you determined FMV. The advice you got from your estate attorney makes sense - when property is sold relatively quickly after inheritance, the sale price is strong evidence of the date-of-death value. Your tax software advisor was also correct that using the same number for basis and proceeds is common and acceptable in inherited property situations. Don't overthink this. The stepped-up basis rules exist specifically to prevent you from paying tax on appreciation that happened during your mother's lifetime. Having little to no gain to report is exactly how it's supposed to work.

I'm so sorry for your loss, Landon. Having gone through something similar with my grandmother's property last year, I completely understand how overwhelming this can feel when you're already dealing with grief. The good news is that everyone here has given you excellent advice, and you're definitely on the right track. The stepped-up basis rules really are designed to work exactly as described - to prevent you from paying taxes on appreciation that occurred during your mother's ownership. One thing that helped me feel more confident was understanding that the IRS sees this scenario all the time. Properties inherited and sold within 6-12 months are incredibly common, and using the sale price as your cost basis is a well-established practice. The fact that your basis and sale proceeds are nearly identical isn't suspicious - it's exactly what the tax code intends in these situations. If you want that extra peace of mind without spending hundreds on a formal appraisal, I'd suggest doing what a few others mentioned: grab a Zillow estimate from around that time period, maybe call the county assessor for the tax assessment value, and document that you considered these factors. Even if the numbers vary a bit, it shows you made a good faith effort to determine fair market value. The key is just keeping good records of your process. A simple memo stating "Property inherited [date], sold [date], no major improvements made, sale price used as FMV based on proximity to date of death" is probably all you'd ever need if questioned. You're handling a difficult situation really well, and it sounds like you have good professional support too.

I'm really sorry for your loss, Landon. This is such a stressful situation to deal with while you're still grieving. From everything I've read here and my own experience with my dad's estate, it sounds like you're actually in a much better position than you realize. The stepped-up basis rules are specifically designed for situations exactly like yours - where someone inherits property and needs to establish a new cost basis. Here's what I learned that might help: when property is sold within 6-12 months of inheritance, the IRS generally accepts the sale price as reasonable evidence of the date-of-death fair market value, especially if it was an arm's length transaction (which it sounds like yours was). The fact that your cost basis and sale proceeds would be nearly identical isn't a red flag - it's actually exactly how the stepped-up basis is supposed to work. You're not supposed to pay capital gains tax on appreciation that happened during your mother's lifetime. If you want to feel more confident about your documentation, I'd suggest: - Getting one additional data point (county assessment, Zillow estimate from around that time, or realtor comps) - Creating a simple one-page memo explaining your valuation method - Keeping all your records organized (will, sale documents, any supporting valuations) The consensus from everyone here seems to be that you're overthinking this. The tax code is actually working in your favor, and using the sale price as your FMV is completely reasonable given your timeline. You've got this!

I'm so sorry for your loss, Landon. This is definitely one of those situations where the tax code actually works in your favor, even though it might not feel that way when you're dealing with all the uncertainty. Based on everything you've described, using the sale price as your FMV is completely reasonable and well-supported by IRS guidance. When property is sold within 6 months of inheritance in an arm's length transaction (which yours clearly was), that sale price serves as excellent evidence of the fair market value as of the date of death. The key thing to remember is that having nearly identical cost basis and sale proceeds isn't suspicious - it's exactly what Congress intended when they created the stepped-up basis rules. You're supposed to avoid paying capital gains tax on appreciation that occurred during your mother's ownership. If you want to strengthen your documentation without spending money on a formal appraisal, consider: - Checking what the county had the property assessed at for tax purposes around that time - Looking up any Zillow/Redfin estimates from that period (some sites let you see historical data) - Creating a simple memo explaining that you used sale price as FMV due to the short timeframe and lack of significant changes Your estate attorney's advice aligns perfectly with established tax practice. The IRS Publication 559 specifically mentions that sales occurring close to the date of death can be used as evidence of fair market value. You're handling this correctly, and the stepped-up basis rules are working exactly as designed in your situation.

I'm so sorry for your loss, Landon. Having just gone through a similar situation with my father's estate, I completely understand how overwhelming this feels when you're already dealing with grief. The good news is that you're actually in a very strong position here. The stepped-up basis rules under IRC Section 1014 are specifically designed for situations like yours. When you inherit property, your cost basis becomes the fair market value as of the date of death, which eliminates capital gains tax on appreciation that occurred during the previous owner's lifetime. Given that you sold the property only 6 months after your mother's passing, using the sale price as your FMV is not only reasonable - it's well-supported by IRS guidance. Treasury Regulation 20.2031-1(b) defines FMV as "the price at which property would change hands between a willing buyer and willing seller," and your arm's length sale is strong evidence of exactly that value. Here's what I'd recommend for documentation: 1. **Keep it simple** - Create a brief memo explaining you used the sale price as FMV because the property was sold within 6 months of inheritance with no major improvements or market changes 2. **Add one supporting data point** - Check the county tax assessment or get a realtor to pull comparable sales from around the date of death. This shows you didn't arbitrarily pick a number 3. **Maintain good records** - Save the will, probate documents, purchase agreement, and your valuation memo The fact that your cost basis and sale proceeds are nearly identical isn't suspicious - it's exactly how the stepped-up basis is supposed to work. Your estate attorney's advice aligns perfectly with established tax practice, and you shouldn't feel "lazy" about this approach. You're handling a difficult situation correctly, and the tax code is actually working in your favor here.

I'm so sorry for your loss, Landon. Having dealt with a similar situation when my grandfather passed, I completely understand how overwhelming this can feel during an already difficult time. After reading through all the excellent advice here, I wanted to add one practical tip that helped me immensely: document your decision-making process as you go. I created a simple folder (physical and digital) with everything - the will, sale documents, any valuations I gathered, and most importantly, a one-page summary of why I chose my FMV approach. The consensus here is absolutely right that using your sale price as FMV is reasonable given the 6-month timeframe. What gave me peace of mind was getting just one additional data point to show I'd considered alternatives. I ended up calling a local realtor who pulled recent comparable sales from around my grandfather's date of death - took about 10 minutes and cost nothing since I mentioned I might need their services later. The stepped-up basis really is designed to work in your favor here. You're not being "lazy" by using the sale price - you're following exactly how Congress intended these rules to work. The fact that your cost basis and sale proceeds are nearly identical means the system is working correctly, not that something's wrong. Keep your documentation simple but thorough, and trust that you're handling this the right way. Your estate attorney's advice aligns perfectly with what everyone here is telling you.