What is a step-up in basis for real estate?

A step-up in basis adjusts the tax basis of inherited property to its fair market value on the date of death. This can significantly reduce capital gains taxes if the property is later sold. A qualified appraisal ensures the stepped-up basis is well-documented and defensible.

Do I need an appraisal for IRS Form 706?

Yes. IRS Form 706 requires a fair market value for real property included in the estate. A certified appraisal provides the documentation needed to support the value and withstand IRS scrutiny.

Can I use a broker opinion instead of an appraisal for estate reporting?

No. Broker price opinions are not accepted by the IRS for estate or gift tax filings. A USPAP-compliant appraisal prepared by a qualified appraiser is required to meet IRS standards.

What’s involved in a date of death appraisal for an inherited home?

We determine the fair market value of the property as of the decedent’s date of death. This includes market research, comparable sales analysis, and a written report suitable for estate settlement and tax reporting.

Is an appraisal required when gifting vacant land to children?

Yes. IRS Form 709 requires a fair market value for gifted property. A formal appraisal ensures the value is accurate, documented, and defensible in case of audit.

How does an appraisal affect capital gains on inherited property?

The appraised value becomes the new tax basis. If the property is sold later, capital gains are calculated using this stepped-up basis, potentially reducing the taxable gain. A clear, well-supported appraisal protects heirs from overpaying taxes.

What makes an appraisal IRS-compliant?

An IRS-compliant appraisal includes a clear scope of work, market-supported valuation, and adherence to USPAP and IRS Revenue Ruling 59-60. It must be prepared by a qualified appraiser and include sufficient documentation for audit defense.

Estate & Gift Tax Appraisals

Purpose & Compliance

Estate and gift tax appraisals require precision, transparency, and strict adherence to IRS standards. At Stein Valuation, we prepare defensible valuations for:

Estate planning
Gifting of real property
IRS Form 706 and Form 709 reporting
Audit defense and fiduciary documentation

Our reports are structured to meet the requirements of IRS Revenue Ruling 59-60, with clear documentation of facts, methodology, and market support.

Scope of Work

Each assignment begins with a clear definition of scope, including:

Effective Date of Value
- Typically the date of death or date of gift
Intended Use
- IRS reporting, estate settlement, or planning
Client & Intended Users
- Attorneys, CPAs, fiduciaries, or family members

This ensures the appraisal is tailored to the legal and financial context of the transfer.

Valuation Process

We apply the same rigorous methodology used in all Stein Valuation assignments, including:

Highest & Best Use Analysis
- Determines the most profitable, legal, and feasible use
Market Research
- Sales, listings, and income data relevant to the property type
Approaches to Value
- Cost, Sales Comparison, and Income (as applicable)
Reconciliation
- A single, supported opinion of value based on the strongest evidence

Report Features

Our estate and gift tax reports include:

A detailed narrative explaining the valuation process
Market-supported adjustments and comparable data
Transparent reconciliation of the applicable approaches
Source documentation for audit defensibility
USPAP compliance and IRS-ready formatting

Step-Up in Basis Reporting

For estate tax assignments, the appraised value often serves as the stepped-up basis for heirs. This is the new tax basis used to calculate future capital gains if the property is sold.

Date of Death Value establishes the basis for inherited property
A defensible appraisal protects heirs from overpaying capital gains
We provide clear documentation to support basis reporting and IRS review
Our reports are structured to assist CPAs and tax advisors in preparing Form 706 and future gain calculations

This step is critical for long-term tax planning and audit protection.

Collaboration & Limitations

While we do not provide legal or tax advice, we work closely with:

Estate attorneys
CPAs and tax advisors
Trust officers and fiduciaries

Our goal is to ensure the valuation integrates seamlessly into your broader planning strategy.

Summary

Whether you’re planning a transfer, settling an estate, or preparing for IRS review, Stein Valuation delivers clarity, compliance, and confidence. If you need a qualified appraisal for estate or gift tax purposes, we’re here to help you navigate the process with professionalism and precision.