Inherited a Home in Florida? Here’s Why the Date-of-Death Value Matters

Inherited a Home in Florida? Here’s Why the Date-of-Death Value Matters

Inheriting a home often comes with more questions than answers. Should you sell it? Keep it? Rent it? And somewhere in the middle of probate paperwork and family conversations, taxes enter the picture.

One of the most important — and commonly misunderstood — pieces of this process is establishing the value of the property as of the owner’s date of death. This value plays a direct role in how much you may owe in capital gains if the home is eventually sold.

That’s where a retrospective residential appraisal comes in.

What Happens to Property Value When Someone Passes Away?

When a residential property is inherited, federal tax law allows the property’s value to reset to its fair market value on the date of death. This reset is commonly referred to as a “stepped-up basis.”

Instead of being tied to what the home was purchased for decades ago, the IRS looks at what the property was worth at that specific moment in time. This matters far more than most people realize.

A Simple Example:

A parent bought a home in Clearwater in 1988 for $120,000. At the time of their passing in 2023, the home’s market value was $460,000. If the heir sells the home for around $460,000, there is generally little to no capital gains tax, because the taxable starting point is the date-of-death value — not the original purchase price. Without properly documenting that value, the IRS may default to incomplete or inaccurate numbers, potentially increasing tax liability.

Why a Retrospective Appraisal Is Needed:

The IRS does not accept:

·         Zillow or online estimates

·         County property appraiser values

·         Realtor price opinions

A retrospective appraisal is a formal appraisal completed after the fact, using historical market data to determine what the property would have sold for on the date of death.

This type of appraisal:

·         Establishes a credible, third-party value

·         Supports capital gains calculations

·         Helps executors and heirs document their decisions

·         Provides clarity during emotionally charged situations

It is especially important when multiple heirs are involved or when the property is sold months or years later.

When Do People Typically Need One?

Residential retrospective appraisals are commonly used when:

·         An inherited home is being sold

·         The estate is going through probate

·         Heirs need documentation for tax filings

·         Siblings are buying each other out

·         No appraisal was completed at the time of death

Even if the sale happens years later, the correct date-of-death value still matters.

Florida’s Market Makes Accuracy Even More Important

Florida home values can change quickly, and many inherited properties were owned long before recent price surges. Neighborhood trends, flood zones, property condition, and timing all affect value. A retrospective appraisal accounts for what the market looked like then, not today — which is critical for accuracy and compliance.

Residential Appraisals with Clarity and Care

At MJS Appraisals, we specialize in residential retrospective appraisals for estate and tax purposes throughout Florida. Our goal is simple: provide clear, well-supported valuations that help families, executors, and professionals move forward with confidence. If you’ve inherited a property and need to understand its value at the time of death, we’re here to help you get it right — without confusion or surprises.

MJS Appraisals – Providing Trusted Property Valuation Services in Tampa Bay & Surrounding Areas.

Michael Scarpa

State Certified Residential Real Estate Appraiser

MScarpa@mjsrealestateservices.com

813.609.2321