Most people facing this question have just inherited a house, or a share of one. Some are serving as executor or successor trustee, and some are the heirs deciding together whether to sell. The word "appraisal" turns out to mean several different things. There is also a quiet worry underneath: getting a number wrong now could cost the family later at tax time, or start an argument between siblings. This guide sets the appraisal types side by side so a family can see what each one is for.
The Short Answer
The appraisal a family needs depends on the question being asked. Three questions come up after a death.
- Income-tax basis. This is the value the house had on the day the owner died.
- Probate inventory. This is the value the estate reports to the court, if a probate is open.
- Sale price. This is what the house is worth today, which helps heirs agree on a price or a buyout.
One report can sometimes answer more than one of these questions. Often it cannot, because the valuation dates differ: a date-of-death value looks backward, and a pre-sale value looks at today's market. The sections below explain each purpose, then compare the two appraisals families most often order.
This page does not cover the selling process itself: listing, pricing, showings, offers and escrow.
Three Reasons an Appraisal Matters: Basis, Probate and Property Tax
Income-tax basis. Federal tax law starts with basis, the starting figure the IRS uses to measure gain when property is sold. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent generally is "the fair market value of the property at the date of the decedent's death." That general rule has stated exceptions. One is the alternate valuation date: when the personal representative elects alternate valuation on a federal estate tax return, basis is the value on that later date instead. The IRS explains that this applies only if the executor files the estate tax return and makes the election there, so it mainly matters for larger estates.
Fair market value means, in plain words, the price a willing buyer and a willing seller would agree on when neither is under pressure. The reset of basis to that value is called stepped-up basis. The heir's starting figure becomes the date-of-death value instead of what the parent originally paid. The step-up in basis for inherited property explains this rule further.
Probate inventory. California probate adds a second reason. Probate Code section 8800 requires the personal representative to file "an inventory of property to be administered in the decedent's estate together with an appraisal of property in the inventory." The inventory and appraisal are combined in a single document.
Property tax. A third, separate track is property tax. A change in ownership can lead the county assessor to reassess a property. For transfers on or after February 16, 2021, Rev. & Tax. Code section 63.2 provides an exclusion for certain parent-child and grandparent-grandchild transfers. That exclusion is covered below.
These three contexts may each call for a separate valuation. Sometimes one well-scoped report serves more than one purpose.
Quick Comparison: Date-of-Death Appraisal vs. Pre-Sale Appraisal
Each type has limits. A date-of-death report says little about what a buyer will pay now, and a current report cannot document basis. In a probate estate, an inventory value is also entered through the court process. In many estates a probate referee, an appraiser appointed through the court, values the assets that are not cash. A probate attorney can say how that applies to a particular estate.
The Date-of-Death Appraisal: What It Is and When You Need One
A date-of-death appraisal establishes the property's fair market value as of the exact day the owner died. That figure generally becomes the heir's basis under the federal rule described above.
The basis matters because of how gain is measured. Under 26 U.S.C. § 1001(a), gain is "the excess of the amount realized" from a sale "over the adjusted basis." If a house sells at or near its date-of-death value, the measured gain may be small. If the house rises in value after the death, the gain generally reflects that later increase.
The IRS addresses the holding period of inherited property in Publication 559. When inherited property that is a capital asset is sold, "the gain or loss is considered long term, regardless of how long you held the property." That is consistent with 26 U.S.C. § 1223(9). Whether a particular sale owes any tax depends on the full facts, including improvements, selling costs and how the property was used. The question of taxes when selling an inherited house belongs with the family's tax adviser.
Ownership can also change the basis picture. IRS Publication 551 explains a community property rule. When a married owner dies, the total value of the community property, even the surviving spouse's half, generally becomes the basis of the entire property. For this rule to apply, at least half the value of the community interest must be includible in the decedent's gross estate.
Timing. The appraisal can be ordered weeks or months after the death. The appraiser relies on comparable sales and market data from around the date of death, and also needs a record of the home's condition at that time. Photos taken soon after the death help with that.
Who prepares it. A licensed or certified appraiser prepares the report. A tax professional can say whether it meets the documentation standards the IRS applies.
Where a probate is open, the inventory value serves a related but distinct function. The two values are not always interchangeable for tax purposes.
The Probate Referee Appraisal: What California Requires
Probate is the court-supervised process for settling an estate. When a probate is open, the court appoints a personal representative to manage the estate. That person is the executor named in a will, or an administrator when no executor serves. The IRS describes the primary duties in Publication 559: "to collect all the decedent's assets, pay the decedent's creditors, and distribute the remaining assets to the heirs or other beneficiaries."
Probate Code section 8800 sets the inventory rules.
- Deadline. The inventory and appraisal are due within four months after letters are first issued to a general personal representative. The court may allow further time that is reasonable for the case.
- Partial filings. Partial inventories are allowed, but all must be filed within that time.
- Real property certification. Along with the inventory, the personal representative files a certification about real property. It states either that the decedent owned no California real property, or that a change in ownership statement has been filed in each county where the decedent owned property.
In many estates, real property is valued by the probate referee rather than by an appraiser the family chooses. That value is recorded for probate purposes. Whether it also works as a tax-basis record is a question for the family's tax professional.
The California Courts' Inventory and estimate property value guide covers the earlier stage of listing what the person owned. It says: "You do not need to have anything appraised. If you go to court later, you may need to have a formal appraisal."
Not every house passes through probate. Property in a living trust, property held in joint tenancy, and property with a named beneficiary or a transfer-on-death deed can pass outside it, depending on how title was held. When that happens, there is no probate inventory, though the heirs may still want a date-of-death appraisal for basis. A probate attorney can say which route the property takes.
If heirs or a trustee disagree about a valuation and the dispute becomes a contested matter, that is a separate subject, handled by an attorney who litigates trust and probate cases.
Property Tax Reassessment and the Exclusion Claim
Property tax runs on its own track, separate from income tax. A transfer of real property can count as a change in ownership, which can lead the county assessor to reassess the property at current value.
For transfers on or after February 16, 2021, Rev. & Tax. Code section 63.2 excludes certain parent-child and grandparent-grandchild transfers from that result. The exclusion applies only when a claim is filed. Its conditions include the following.
- Transferor's residence. The house was the transferor's principal residence.
- Transferee's residence. The house becomes the transferee's principal residence within one year of the transfer.
- Exemption filing. The transferee files for the homeowners' or disabled veterans' exemption within a year of the transfer.
- Grandchildren. For a grandparent-grandchild transfer, all of the grandchild's parents who are the grandparents' children, other than stepparents, are deceased as of the transfer.
- Value test. The statute also includes a value test. Under it, part of the home's value above a limit can still be added to its taxable value. The county assessor and the State Board of Equalization publish the current figure.
Claim timing. The claim is generally filed within three years after the transfer. If it is earlier, the claim is due before the property is transferred to a third party, or before the eligible transferee stops living there. A claim is also timely if it is filed within six months after the mailing date of a notice of supplemental or escape assessment. A later claim may still be considered if the property has not gone to a third party. In that case, any exclusion applies from the lien date of the year the claim is filed.
An appraisal is not an exclusion claim. The family files the claim with the county assessor, and the assessor determines the assessed value. A date-of-death appraisal may be useful evidence if the family questions that value, but the assessor's office is the place to raise it. The guide on Proposition 19 and inherited property walks through the exclusion in more depth.
When a Pre-Sale Appraisal Makes Sense on Its Own
A pre-sale appraisal answers a present-day question: what the house would bring now. It does not replace a date-of-death report for basis.
A current appraisal tends to fit in several situations.
- Several heirs. When several heirs share a house, an independent figure can help them agree on a listing price, or on a fair buyout when one sibling wants to keep the home.
- Probate sale. In a probate estate, a sale may need court confirmation or a notice of proposed action. Which one applies depends on the personal representative's authority, and a probate attorney can confirm it. An independent value can support the proposed price either way.
- Trust sale. A trustee owes duties to the trust beneficiaries, including acting fairly and prudently with trust property. A current appraisal is one way to document that a sale price was reasonable.
A current appraisal may matter less when the heirs already agree, or when the date of death was recent and the market has barely moved.
How a family sells is a separate choice. A sale through a listing agent goes through the usual selling process. A cash sale is a different category. It can reduce repairs, showings, financing uncertainty and time, and it is not automatically the best fit for every family. Either way, an independent value gives the heirs a reference point for any offer. For a broader look at keeping, renting or selling, see the guide on what to do with inherited property.
How to Get a Date-of-Death Appraisal in California
The work starts with finding a licensed or certified real property appraiser. The California Bureau of Real Estate Appraisers licenses appraisers in this state. Its About BREA page describes a licensing unit and an enforcement unit that investigates complaints against licensed appraisers. When engaging an appraiser, a family can say plainly that the report is a retrospective value as of the date of death, for tax-basis records, so the scope fits the purpose.
The appraiser typically asks for the following.
- Address. The property address.
- Date of death. The decedent's date of death and the decedent's name.
- Title documents. A copy of the deed or title, if one is available.
- Access. Access to the property, or permission to rely on records and comparable sales.
The appraiser then prepares a written report. It states the fair market value as of the date of death and is supported by comparable sales from that period.
The family's CPA, enrolled agent or tax attorney reviews how the figure is used on the estate's or the heir's tax return. The IRS adds a note in its FAQ on the sale of inherited property. Where an estate tax return was filed and the heir receives a Schedule A to Form 8971, the heir may be required to report a basis consistent with that value.
If You Are Sorting Out What the House Is Worth
Settling a parent's estate and deciding about the family house is a lot to carry at once, especially with siblings waiting for answers. Working out which value matters, and on which date, is often the first step that makes the rest of the decision feel manageable. The Find Your Next Step questionnaire at Silver Lining Estate asks a few questions about the role involved, whether there is a will or a trust, whether real estate is part of the estate, and what still needs to be worked out. It then points to the guides and the kinds of professional help that fit a situation like this one.
