Most people facing this question have just inherited a house, or have just been named the person in charge of one, and are trying to get it right while family members wait. Someone has said "get an appraisal," someone else has said it isn't needed, and nobody can explain what it is for. This guide walks through when a value has to be documented, what that value is used for later, and who is allowed to prepare it.
The Short Answer: When an Appraisal Is Required
Three situations call for a documented value of inherited California property.
The first is probate. If the estate goes through the court, the property listed in the inventory is appraised. Some of it is appraised by the personal representative, the person the court appoints to collect the property, pay the bills and distribute what remains, as the California Courts guide to property after someone dies describes the role. The rest is appraised by a probate referee.
The second is federal income tax. An heir's tax basis in inherited property is generally its fair market value on the date of death, under 26 U.S.C. § 1014(a). That figure has to come from somewhere defensible.
The third is property tax. A parent-child exclusion claim under Rev. & Tax. Code section 63.2 turns partly on the home's value at transfer.
A probate referee's appraisal is part of the court case. A private appraisal is one the family, the estate or a trustee orders for tax basis or property-tax purposes. When property passes through a living trust and no court is involved, the tax-basis question still remains.
What a Date-of-Death Appraisal Establishes
Fair market value is the price a willing buyer and a willing seller would agree on, neither one under pressure to act and both reasonably informed. A date-of-death appraisal puts a number on that price as of the day the person died.
That date matters because of the basis rule. Basis is the starting figure used to measure gain or loss when property is sold. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent is, except as otherwise provided, "the fair market value of the property at the date of the decedent's death." The statute also lists other valuation choices, including an alternate valuation date the estate may elect. This reset is often called a [step-up in basis](/step-up-in-basis-for-inherited property). If values fell instead, the basis steps down.
For an heir who later sells, the taxable gain is generally measured from that date-of-death basis, not from what the parent paid decades ago. The controlling date is the date of death. It is not the day a deed is recorded, and it is not the day probate closes.
A written appraisal report typically describes the property, compares it with sales of similar homes near the valuation date, explains the appraiser's reasoning and carries the appraiser's signed certification. Where an estate tax return is involved, the IRS can examine the values reported. A written report from a qualified appraiser is the usual way to support them.
The Probate Referee: California's Court-Appointed Appraiser
The California State Controller's Office probate referees page says the Controller appoints probate referees to appraise all types of estate assets. It says candidates must pass a state-administered test on probate procedures and appraisal principles, and that the Controller appoints at least one referee per county. The same page says a referee's service is required for court resolution of an estate and is also available for trust administration outside probate.
Within a probate case, the court designates the referee. Probate Code section 8900 provides that "the appraisal of property in the inventory shall be made by the personal representative, probate referee, or independent expert." Under Probate Code section 8902, except as otherwise provided by statute, the personal representative delivers the inventory and supporting data to the referee designated by the court, and the referee appraises all property other than what the personal representative appraises.
The result is the inventory and appraisal filed with the court, which shows the estate's value for the probate case. That figure also documents date-of-death value, which can support tax basis. Whether it is enough for a particular sale or tax return is a question a CPA or enrolled agent answers.
Property Tax and Proposition 19: When Value Determines Reassessment
A death in the family usually counts as a change in ownership for property tax, and the county assessor then decides whether the home is reassessed. Two filings matter here.
First, Rev. & Tax. Code section 480 requires a change in ownership statement. In a probate estate, the personal representative files it with the county recorder or assessor before or at the time the inventory and appraisal is filed. In other cases, including a transfer through a trust, the trustee or the transferee files it within 150 days after the date of death.
Second, for transfers on or after February 16, 2021, the parent-child and grandparent-grandchild exclusion from reassessment is Rev. & Tax. Code section 63.2, known as Proposition 19. For a home, the property has to have been the parent's principal residence and has to become the child's principal residence within one year. The child must also file for the homeowners' or disabled veterans' exemption within a year. A grandchild qualifies only if all of the grandchild's parents who are children of the grandparents have died. A house the heir rents out instead does not meet the residence condition. The statute treats a family farm separately.
The exclusion has a value limit. If the home's fair market value at transfer reaches or exceeds the parent's taxable value plus a set amount, the excess is added to the taxable value. The county assessor's office publishes the current figure. A date-of-death appraisal helps show which side of that line the home falls on.
The claim is filed with the assessor within three years after the transfer, or before a transfer to a third party, or before the eligible heir stops living there, whichever is earliest. A claim is also timely if it is filed within six months after a notice of supplemental or escape assessment is mailed. A late claim, where the home has not gone to a third party, can apply from the year it is filed.
The county assessor answers reassessment questions. Income-tax basis is a separate question for the IRS and the Franchise Tax Board, and a CPA or enrolled agent reviews it. More detail is in Proposition 19 and inherited property.
When No Probate Is Involved: Trusts, Joint Tenancy, and Beneficiary Transfers
A successor trustee who takes over a living trust often hears that "the trust avoids probate" and assumes nothing else is needed. That is half right. Property held in a revocable living trust passes under the trust's terms, managed by the successor trustee for the beneficiaries, without a court case, so no referee is designated. Property held in joint tenancy generally passes to the surviving joint tenant without probate.
The basis rule still applies. Under 26 U.S.C. § 1014(b), property the decedent placed in a trust during life, keeping the right to revoke it, counts as acquired from the decedent. So does a surviving spouse's half of community property in some cases, a point the IRS explains in Publication 551, Basis of Assets.
Without a referee, the trustee or heirs typically order a private appraisal to document date-of-death value. It can be done months or years later. A retrospective appraisal looks back to the date of death and relies on comparable sales from around that time.
Whether a formal appraisal is needed for a given tax situation is a question for a CPA, an enrolled agent or a tax attorney. Disagreements among heirs over value or a trustee's conduct are a separate subject, handled by an attorney who litigates trust and probate cases. When several heirs share the house, inherited property with multiple owners covers how co-ownership works.
Who Qualifies to Appraise Inherited Property in California
Two kinds of appraisers do this work, and they come to the job differently.
Probate referees are appointed by the State Controller, as described above. In a probate case the court designates one, so the personal representative does not pick a referee the way a family hires a private appraiser.
Private appraisers are licensed through the California Bureau of Real Estate Appraisers. BREA's page says it licenses and certifies real estate appraisers. It says applicants must meet minimum education and experience requirements and pass a nationally approved examination, and that its Enforcement Unit investigates complaints against licensed appraisers. A family can ask BREA directly whether an appraiser holds a current California license.
IRS rules set standards for appraisals used on certain returns. A CPA or enrolled agent can say whether those standards apply to a given estate.
A real estate agent's comparative market analysis is a pricing opinion prepared for marketing. It is not an appraisal, and it is not the document a court or a tax return relies on. Questions a family might ask an appraiser include whether they hold a current California license, whether they have done retrospective date-of-death work, and whether the report will be written and signed.
