This post will explain what you need to know about the value of real estate when it’s time to file inheritance taxes or to settle an estate.

Inheritance Taxes (or Estate Taxes) are usually filed within a year of inheriting property, and this can be a very stressful time period for the family.

I believe that our appraisal practice needs to remain human while asking the right questions during this difficult time.

These conversations require compassion and patience because quite often, the family members don’t even know where to begin….

I am always doing my best to be as helpful as possible.

And, the IRS has certain guidelines that must be followed are as clear as mud.

So, an Estate Attorney or Accountant would be the best person to ask for guidance regarding the details of those rules.

But, here is one thing that is clear:

In order to file Estate Taxes, you will need to know the fair market value of the property.

And using an online valuation tool (like Zillow) could be very misleading and cause you to pay higher taxes.

Especially if the property is high-value, unusual, or has been in the same ownership for many years.

That's why one of the first things you will need is an appraisal of the property you have inherited.

And did you know the appraisal report completed for the purpose of filing inheritance taxes is much different from a report that you would receive when buying or refinancing a house?

• Specific language within the report defining fair market value according to IRS guidelines.

• Extensive historical research and analysis regarding the inherited house and the comparable sales.

• The estimate of value is typically based on the date of death.

Because we are usually estimating value based upon a date in the past, these appraisal reports are also known as retrospective appraisals.

Sometimes, there will be two values needed:

1. date of death

2. current value.

The current value is often needed if many months (or sometimes years) have passed since the date of death and the the heirs have decided to either list the property for sale or sell to a family member.

What’s most important is that the appraiser understands the purpose of the appraisal to ensure the client’s needs can be met appropriately.

Since the estate appraisals are a very specific type of valuation, it is also important that you are working with the right appraiser for you.

You will want an appraiser who has experience in completing appraisal reports for the IRS.

Whenever I am helping a client in this situation, my goal is to provide a reliable appraisal report while being mindful of how difficult this experience is for you and your family.

Get our free guide: Simplifying Estate Appraisals with Clarity and Compassion

We’re here to help you navigate this challenging time with confidence and peace of mind.