Step-Up Basis Appraisal

Appraisal of Real Property for Step-Up Basis

This type of appraisal is for tax purposes on a property that is passed to heirs/beneficiaries.

• The IRS will allow the estate to have the property appraised as of the date of death, or a date six months from the date of death.

• The client may ask you to do a valuation as of both effective dates, which you will treat as two different assignments, even

though it will require only one inspection.

• If the IRS finds that the value of the entire estate is under the allowable limit, then no estate taxes need to be paid.

• The fair market value of the property as of the effective date will become the basis of value for the property (stepped-up from the value when it was originally purchased by the decedent)

• Then the heir or heirs will only be liable for any taxes on the gain in value (profit they realize), if and when they sell it.

• In this assignment, you will identify the intended use as “establishing taxable basis”

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