If you have recently lost a loved one, then you have most likely found yourself trying to figure out how to best resolve their estate. Having to determine how much is owed to the IRS, if any, is an overwhelming process for anyone. Nonetheless, this is a crucial part when it comes to settling the estate, as well as, determining the new income tax basis for the person who inherits the house.
In situations like this, it's essential to have an experienced, qualified, and licensed appraisal expert to determine the retrospective "Fair Market Value" of the property as of the date of death. The term retrospective means the property is valued as of the specific date in the past. This is done whether the value is determined from last week, last month, or it could even be seven years. This process is very similar if you were figuring out the market value today through comparable sales, market trends, and comparative market data, the only exception to this will be done from the date of death.
When an estate is transferred to another person due to a death in the family or inheritance, it's typical for a member to choose an appraiser, attorney, or accountant to order the appraisal. Usually, these appraisals get handled in about 2-6 months depending on the death of a loved one or inheritance of the property. At times it can be years before the appraisal is ordered.
In estate planning situations, it's common for an appraiser to conduct a retrospective appraisal. This means even though the property gets inspected that day, the property isn't valued off of that date. Instead, the value is based upon another, which is usually the date of death of the owner of the property. For example, if someone's loved one passed away on April 22nd, 2011 and the appraiser inspected the property on April 13th, 2018, the value of the property would be based on what the market price of the house was on April 22nd, 2011.
Other Types of Value
In addition to the retrospective value throughout the estate planning and probate process, in some cases, the ordering party will request an up-to-date "as-is" market value that is based upon when the title of the house was transferred from the deceased to the heir (if the transfer occurred after the date of death). In situations like this, two separate values are issued. Although the majority of the time, only one appraisal is needed, it just depends on the particular needs of the estate.
If you find yourself in a situation like this or know that it will be coming shortly, don't wait until the last minute to figure out the value of your house. Let Sunbelt Appraisals take the pressure off of you. We can help you determine the value of your estate and can answer any questions you may have about the appraisals process. At Sunbelt Appraisals, we understand the challenges that go into "retrospective" and "date of death" appraisals. Therefore, we strive to make situations like this as seamless as possible and let you focus your attention on other important details and the passing of your loved one.