IRS Step-Up Appraisals in Phoenix, AZ

Retrospective date-of-death valuations for IRS estate tax filings and stepped-up basis calculations. Protect your inheritance with proper documentation.

Request Step-Up Appraisal (602) 833-4388

Frequently Asked Questions

What is a step-up in basis and why does it matter?

When you inherit property, its tax basis "steps up" to fair market value at the date of death. This eliminates capital gains tax on all appreciation during the original owner's lifetime. Documenting this stepped-up basis with a professional appraisal protects you from overpaying taxes when you later sell the property.

How long after someone dies can I get a date-of-death appraisal?

You can obtain a retrospective date-of-death appraisal at any time, even years after the death. However, it's best to act promptly while market data is readily available and property condition can be more easily documented. We recommend getting the appraisal within the first year when possible.

What does a date-of-death appraisal cost in Phoenix?

IRS step-up appraisals in Phoenix typically range from $500 to $1000, though retrospective valuations requiring extensive historical research may cost more. You'll receive a fixed quote based on your specific situation.

Does the IRS require a professional appraisal for stepped-up basis?

While the IRS doesn't always require an appraisal, having professional documentation is strongly recommended. Without an appraisal, you may struggle to prove the property's value if the IRS questions your basis—potentially resulting in additional taxes, penalties, and interest.

What qualifications must an appraiser have for IRS purposes?

The IRS requires a "qualified appraiser" with state certification, relevant experience, and USPAP compliance. Our appraisers meet or exceed all IRS requirements and provide the certifications and declarations needed for estate tax filings.

Understanding the Step-Up in Basis

The "step-up in basis" is one of the most significant tax benefits available to heirs of inherited property. When someone inherits real estate, the property's tax basis "steps up" to its fair market value as of the date of the decedent's death. This means that any appreciation that occurred during the original owner's lifetime is never taxed as capital gains. Documenting this stepped-up basis with a professional appraisal is crucial for Phoenix residents who inherit property.

Consider a home purchased decades ago for $50,000 that was worth $500,000 when the owner passed away. Without the step-up provision, selling the property would trigger capital gains tax on $450,000 of appreciation. With the step-up, the heir's basis becomes $500,000, and only gains above that amount are taxable. This can represent hundreds of thousands of dollars in tax savings.

Why You Need a Date-of-Death Appraisal

The IRS requires documentation of fair market value when claiming a stepped-up basis. While informal estimates might seem sufficient initially, problems arise when the property is sold— sometimes years or even decades later. Without a contemporaneous appraisal, heirs struggle to prove what the property was worth at the date of death.

Property values in Phoenix have changed significantly over time, making retrospective valuations increasingly difficult as years pass. Market data becomes harder to locate, comparable sales records may be incomplete, and memories of property condition fade. An appraisal performed near the date of death, or a properly researched retrospective appraisal, provides the documentation needed to support your stepped-up basis claim.

For estates that trigger federal estate tax filing requirements, an appraisal is mandatory. The IRS scrutinizes estate valuations carefully, particularly for high-value properties. An unsupported or inadequately documented valuation can result in adjustments, penalties, and interest charges. Eagle Home Appraisal Phoenix provides comprehensive appraisals designed to withstand IRS review.

Retrospective Valuation Methodology

Date-of-death appraisals are retrospective assignments—we determine what the property was worth on a specific historical date rather than today. This requires specialized research techniques and access to historical market data. Our appraisers maintain extensive databases of past sales in Phoenix and Maricopa County, enabling accurate retrospective analysis.

The retrospective approach involves researching comparable sales that occurred around the effective date, understanding market conditions at that time, and adjusting for any changes to the subject property. We document the property's condition as of the date of death through photographs, prior inspection records, estate inventories, and interviews with family members who knew the property.

Our IRS Step-Up Appraisal Services

Retrospective date-of-death valuations

IRS Form 706 support

IRS Form 8283 compliance

Historical market analysis

Capital gains tax planning

Qualified appraiser certification

Comprehensive documentation

Estate tax filing support

Audit defense documentation

IRS Qualified Appraiser Requirements

The IRS has specific requirements for appraisers providing valuations for tax purposes. A "qualified appraiser" must have earned an appraisal designation from a recognized professional organization or meet minimum education and experience requirements. The appraiser must also demonstrate verifiable experience in valuing the type of property being appraised.

Eagle Home Appraisal Phoenix's appraisers hold state certification and maintain active credentials that meet or exceed IRS requirements. We provide the certifications and documentation needed for estate tax filings, including the required appraiser declaration. Our qualifications have been accepted in IRS examinations and audits throughout Arizona.

Timing Considerations

While date-of-death appraisals can be prepared at any time, there are advantages to acting promptly. Market data is most readily available for recent dates, property condition can be more easily documented while memories are fresh, and having documentation in place protects against future disputes or audits.

For estates requiring a federal estate tax return (Form 706), the filing deadline is generally nine months from the date of death. Appraisals should be completed well before this deadline to allow time for review and any necessary revisions. We recommend contacting us as soon as practical after a death to ensure timely completion.

Working with CPAs and Estate Attorneys

Step-up basis appraisals are typically requested by CPAs preparing estate tax returns or capital gains calculations, or by estate attorneys administering estates. Eagle Home Appraisal Phoenix coordinates directly with these professionals to ensure our reports meet their specific needs.

We understand that tax and legal professionals have specific requirements for documentation, formatting, and content. Our detailed reports provide the comprehensive information needed for tax compliance, including market analysis, comparable sales data, and certification statements required by the IRS. We are available for consultation to discuss valuation issues and methodology.

How the federal basis rule works for an inherited Phoenix home

Under the Internal Revenue Code (26 U.S.C. 1014(a)(1)), an heir's starting basis is generally the fair market value "at the date of the decedent's death." The IRS spells out what follows: sell for more than that basis and you have a taxable gain (IRS). In general, then, value the house gained before the death is not taxed when the heir sells, value it gains afterward is, and when a house had lost value by the time of death, the heir's starting basis sits below what the owner originally paid. The inheritance itself generally is not income to the heir, though rent the property later earns is taxable (Publication 525). The rule has exceptions, one more reason to have a tax adviser look at your facts.

Two refinements apply when an estate files a federal estate tax return:

Alternate valuation date. An executor can choose a valuation date six months after the death instead, but only if that choice lowers both the value of the gross estate and the tax, and the election is irrevocable (26 U.S.C. 2032).
Consistency. Where including the house increased the estate tax, the heir's basis cannot exceed the value finally determined for that tax (§ 1014(f)).

Heirs owe no federal inheritance tax, because there is none. The federal estate tax falls on the estate and is paid by the executor, and a return is required only above the filing threshold for the year of death, or when an executor files to elect portability. The IRS lists that threshold as $15,000,000 for the 2026 death of a U.S. citizen or resident (IRS). When a return is required, the Form 706 instructions put the due date 9 months after the date of death. Arizona adds no estate, inheritance or gift tax of its own.

Arizona community property and the full step-up

Arizona is on the IRS list of community property states in Publication 551 and Publication 555, and that matters for a married couple's home. Section 1014(b)(6) counts the survivor's one-half share of community property as property acquired from the spouse who died, so both halves may take a basis equal to their value at death. One condition applies: at least half of the whole community interest in the property must have been includible in the deceased spouse's gross estate, and according to Publication 551 it does not matter whether the estate has to file a return. Publication 555 notes one exclusion: the rule does not apply to registered domestic partners.

Publication 555 gives an example: community property with an $80,000 basis was worth $100,000 when one spouse died. Afterward the survivor's half has a $50,000 basis, and so does the half that passes to the heirs.

Only community property gets that treatment. Whether a particular Phoenix house qualifies depends on when and how it was acquired, how title was recorded with the Maricopa County Recorder and any agreement between the spouses, so confirm it with your tax adviser rather than assuming it. If the estate is probated, the inventory asks the same community-or-separate question about the house (A.R.S. § 14-3706).

The county's tax value is a different number

The Maricopa County Assessor's full cash value is a property-tax figure whose valuation date is January 1 of the year preceding the tax year (A.R.S. § 42-11001). The basis rule asks for fair market value on the date of death, and a tax-roll figure dated to a January 1 is not that value. Arizona's small-estate affidavit for real property does use the assessment-roll figure to test its $300,000 limit (§ 14-3971(E)), but that is a probate shortcut, not a basis value.

Have your tax adviser confirm the date and the treatment

Your CPA or attorney should confirm which date applies (the date of death or an elected alternate date), whether the community property rule reaches the house, and how the value will be used, before the report is ordered.

For a retrospective report, bring

The date of death, and whether an estate tax return will be filed or an alternate date is under consideration.
The recorded deed from the Maricopa County Recorder and the parcel number from the Maricopa County Assessor.
Whether the spouses held the home as community property, as far as you know.
Photographs, listings, inspection reports or invoices showing the home's condition at the date of death, and a list of later changes.
The names of everyone who will rely on the report.

The Arizona sections on this page were written with AI assistance for Eagle Home Appraisal Phoenix.

Protect Your Inheritance Value

Document your stepped-up basis with a professional date-of-death appraisal. Contact us for a consultation about your IRS appraisal needs.

Request Quote View All Services