How Do You Get the Date-of-Death Appraisal—and What Happens If You Skip It?

When you inherit a home, the to-do list is long: Notify the bank, contact an estate attorney, figure out what to do with everything left inside. Somewhere in that blur, a step that could save you tens of thousands of dollars often gets missed.

That step is the date-of-death appraisal. This is a formal valuation of the home's fair market value as of the day the owner passed. Though it sounds morbid, it's actually the single most important number in determining how much capital gains tax you'll owe when you sell, because it helps determine your step-up in basis. 

Losing a parent or loved one is overwhelming, and the financial and legal obligations that follow can seem endless. Understandably, a technical appraisal requirement doesn't make it to the top of the list. But skipping it or putting it off until it's too late can turn an already difficult time into an expensive one. Here's why it matters, and what happens if you let it slip.

What is the step-up in basis?

When you inherit a home, the IRS resets your cost basis to the property's fair market value at the time of the owner's death. This is called the step-up in basis, and it's one of the most valuable tax benefits in the tax code.

Here's how it works: Say your mother bought a house for $100,000 in 1990, and by 2026, it's probably worth $500,000. If she sold it herself for that much, she'd owe capital gains tax on $400,000 of growth. But if she dies and you inherit it, your basis resets to $500,000—the value at death. Sell it for $500,000, and you avoid capital gains tax. 

That protection holds only if you can document the value, which is what a date-of-death appraisal does. 

"That ‘step up’ is what reduces or even eliminates capital gains when the property is sold later,” says Craig Parker, assistant general counsel at Trust & Will. “If you do not lock in a defensible value, you are guessing on the most important number in the tax calculation."

And when it comes to the IRS, even an educated guess at an estimate is hard to defend. 

How a date-of-death appraisal works

A standard home appraisal looks at current market conditions—what comparable homes are selling for right now. A date-of-death appraisal asks a different question: What was this home worth on a specific date in the past?

To answer that, an appraiser looks at comparable sales around the date of death and assesses the property's condition as it was at that time. Done promptly, it's not dramatically different from a standard appraisal. The complexity grows the further you get from the date of death, as it becomes harder to reconstruct accurate market conditions.

That's why who you hire matters.

"If the appraisal is poorly done and lacks the proper evidence and support, the IRS can dispute the stepped-up basis," says Taylor Newcomb Damaska, an estate planning attorney at Helton Law Firm.

Look for a state-licensed or certified appraiser with specific experience in date-of-death valuations for estate and tax purposes, rather than someone who primarily does standard mortgage appraisals. 

Parker notes that in California probate cases, the court assigns a probate referee, a state-authorized appraiser, to value estate assets. Even outside of probate, families can often hire the county probate referee directly. It's worth checking whether your state has a similar resource.

What happens if you skip it?

Some heirs estimate the value themselves, ask a real estate agent for an informal opinion, or simply don't think about it until they're ready to sell. Any of those paths carries real risk.

If the IRS challenges your basis and determines a lower value, you could owe more capital gains tax than expected—plus interest and potential penalties. 

"Unsupported estimates are tough to defend, especially if the sale happens soon after death and the numbers look convenient rather than evidence-based," says Parker.

Don't let uncertainty among multiple heirs put you off, either. The cleanest solution is to hire a single independent appraiser upfront and agree on the scope before the report is done. 

"Pick one qualified, independent appraiser and agree on the scope upfront so everyone is relying on the same methodology and written report," Parker says. It gives everyone the same objective number to work from.

A formal appraisal typically costs a few hundred dollars. The tax liability it protects against can run into the tens or hundreds of thousands. It's not a close call: Best not to skip it.

What about the six-month rule?

You may have heard that heirs can choose to value an inherited property six months after the date of death rather than on the date itself. This is called the alternate valuation date, and it's worth understanding—but it's also commonly misunderstood.

The alternate valuation date is an estate tax concept, not a tool individual heirs can deploy on their own.

"It is an estate-level election, not something heirs choose asset by asset," Parker says. This means that if the executor elects the alternate date, it applies to everything in the estate, not just the house.

The scenario where it becomes relevant: if the property's value has declined significantly in the six months following death, the executor may elect the alternate date to reduce the taxable estate and lower the estate tax bill. But given that the federal estate tax exemption currently sits at $13.6 million, this is a consideration for a relatively small number of estates.

When to get this done: ASAP

Getting a date-of-death appraisal may not seem crucial, but you should get one as soon as possible, and definitely before you list the home or make any major changes to it.

"The value should be established before filing the deceased person's estate tax return and before selling—or reporting the sale—of the home," says Damaska.

There's no single universal deadline, but the practical one is clear: You need the number before you file.

Parker adds another reason to move quickly: Getting the appraisal done while the property is in its inherited condition makes it easier to document accurately. Once you've renovated, cleared out the contents, or made other changes, reconstructing what the home looked like—and what it was worth—at the time of death becomes harder to support.

The chaos of settling an estate makes it easy to defer anything that seems administrative. But a date-of-death appraisal is one of the few steps that's genuinely hard to undo later, and the cost of skipping it can dwarf the cost of doing it.

Get it done early, before you list, renovate, or change anything about the property. You’ll be glad you did, as will everyone else who stands to inherit your estate down the line.