The IRS does not use the exact phrase “date of death appraisal,” but it does require estates and heirs to report the fair market value of property as of the date of death. When an estate files Form 706, real estate values must be supported by documentation, and the form instructions call for appraisals of real property. Even when no estate tax return is due, inherited property receives a stepped-up tax basis equal to its date of death value under IRC Section 1014. If heirs later sell the property, they must be able to substantiate that basis to the IRS. Online estimates and property tax assessments generally do not meet that standard. A written appraisal prepared by a licensed appraiser, with an effective date matching the date of death, is the documentation the IRS and tax professionals expect. So while the requirement is technically for a supportable fair market value, in practice a formal appraisal is the reliable way to meet it.
