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Establishing cost basis of inherited real estate ???

... general statements:

1. In order to calculate the cost basis for inherited real estate, you will use either the value of the property on the date of the original owner's death, or a date selected by the executor no later this six months after the death.
2. The basis of an inherited home is generally the Fair Market Value (FMV) of the property at the date of the individual's death. If no appraisal was done at that time, you will need to engage the help of a real estate professional to provide the FMV for you. There is no other way to determine your basis for the property

>>> Given that there may be a variety of documents in place to legally allow the inheritance of real real estate; my question is more related to:

----- are there real estate specialists who provide a legal value assessment for tax purposes; and/or are there other methods or individuals who are also legally qualified.

ALSO that capital gains taxation/estate tax varies by state; but this topic is directed to federal capital gains taxation

Thank you if you are able to provide guidance in this area; either from personal experience or definitive links to information.

NOTE: A go to I use for many items to help with information about whatever, is a YouTube search. I have not yet done this. But, if you have a useful YouTube link, please provide.
Hopefully, this topic area will be of help many others here, too.



  • From personal experience then ...

    I was a co-executor for an estate that owned an investment co-op unit. We went to a real estate agent who did a lot of sales in the co-op and asked for a written comp. Six months later (more on that below) we got a second written comp. These served as good faith valuations. Not legal opinions, but adequate.
    Certain types of assets are easy to value, such as the contents of a bank account or shares of stock in a publicly traded company. Other asset types can be a little less definitive, such as a used car or collectible, which you can estimate using public references, or real estate, where you may want to look at the tax assessor's valuation and talk to a real estate agent about sales of comparable properties. Still other asset types can be downright difficult to value, such as artwork or a private business, for which you likely need hire a professional appraiser.

    Six months after death is the alternate valuation date. An executor can elect to use the alternate valuation date for valuing all the property in the gross estate only if two conditions are satisfied:
    1. The value of the estate must be less on the six month anniversary than on the date of death; and
    2. The federal estate tax must be reduced by using the alternate valuation date.

    That second requirement is key. If there is no estate tax due as of date of death then it can't be reduced, so one cannot use the alternatve valuation date. If you've got estate taxes due (which doesn't happen unless the estate is worth over $11M), you should be talking with a good estate lawyer not asking questions here.

    There's an exception to using the full six months. If the executor uses the alternate valuation date and an estate asset was sold between the time of death and the six month mark, then the actual sale price is used in the alternate valuation.
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