Inheriting a property can feel overwhelming.
Along with the emotional impact of losing someone, you may suddenly be responsible for a home, condominium, rental property, vacant land, or other real estate. There may be family members to coordinate with, legal documents to review, expenses to pay, personal belongings to sort through, and decisions to make about whether to keep, rent, renovate, or sell the property.
Before you clean it out, make repairs, move furniture, paint the walls, or call a contractor, there is one important step you should take:
Photograph the Property Immediately
Take detailed photographs and videos of the property as close to the date of death as reasonably possible.
Document the exterior, interior, condition, finishes, improvements, deferred maintenance, damage, landscaping, outbuildings, views, and any other features that could affect value.
This may seem like a small task today, but those photographs could become extremely valuable several years from now.
Why?
Because the condition of the property on the effective date of an estate appraisal matters. If the home is later renovated, repaired, damaged, emptied, rented, or substantially changed, it may become much more difficult to determine what the property was actually like when it was inherited.
A retrospective appraisal can be completed later, but the appraiser must rely on the best available information about the property as it existed on the retrospective valuation date. Good photographs, videos, records, and descriptions can provide important evidence.
For what it’s worth, your memory may fade. Your camera roll does not have to.
Why the Date-of-Death Value Matters
For federal tax purposes, the basis of inherited property is generally its fair market value as of the date of the decedent’s death. In certain situations, an alternate valuation date may be elected by the estate’s executor.
Your tax basis becomes important when the property is eventually sold.
In simplified terms, the difference between the property’s adjusted basis and its eventual sale price may affect the taxable gain or loss. Improvements, depreciation, selling expenses, ownership structure, and other circumstances may also affect the calculation.
Consider this example:
A property was worth approximately $450,000 when it was inherited. Several years later, it was sold for $650,000.
The owner may need reliable documentation supporting the property’s value when it was inherited. Without an appraisal, photographs, repair records, or other historical information, establishing that earlier value can become more challenging.
That is why waiting until the property is being sold is not always the best strategy.
A Date-of-Death Appraisal Is Different From a Current Appraisal
A date-of-death appraisal is a retrospective appraisal.
Instead of determining what the property is worth today, the appraiser develops an opinion of what it was worth on a specific date in the past. The appraiser analyzes market conditions, comparable sales, property characteristics, location, and the condition of the property as they existed around that earlier date.
The IRS generally uses fair market value—not necessarily the original purchase price or the amount the property may have been worth years earlier—when accounting for assets included in an estate.
The more reliable information the appraiser has, the better equipped the appraiser will be to analyze the property retrospectively.
How to Photograph an Inherited Property
You do not need professional photography. Clear and thorough documentation is more important than artistic lighting.
Photograph:
- The front, rear, and sides of the property
- The roofline, driveway, yard, landscaping, pool, dock, fencing, and exterior improvements
- Every bedroom, bathroom, and living area
- The kitchen, including cabinets, countertops, appliances, and flooring
- Garages, patios, porches, balconies, sheds, workshops, and detached structures
- Signs of damage, leaks, mold, settlement, deterioration, or deferred maintenance
- Renovations, upgrades, custom finishes, or unusual property features
- Views, waterfront access, golf course frontage, canals, or other location influences
- Mechanical systems when accessible, including air-conditioning equipment and water heaters
Take both wide-angle photographs of each room and closer photographs of important details.
A slow video walkthrough can also be helpful. Begin outside, walk through the entire property, and verbally describe what you see. State the date and identify any known problems, renovations, or unfinished work.
Keep the original files whenever possible because their metadata may help establish when they were created.
Do Not Renovate Before Documenting the Original Condition
One of the most common mistakes is immediately cleaning out or renovating the property without first documenting it.
A new kitchen, fresh paint, updated flooring, landscaping, or a repaired roof may improve the property, but those changes can also make it difficult to reconstruct its previous condition.
Before work begins:
- Photograph and video the entire property.
- Obtain copies of any recent inspection reports.
- Save contractor estimates and invoices.
- Record the dates when repairs or improvements were completed.
- Keep before-and-after photographs.
This creates a clearer distinction between the property’s inherited condition and the improvements made afterward.
Gather the Property Records
Create a file—digital, physical, or both—for all property-related information.
Useful records may include:
- The deed and ownership documents
- A copy of the will, trust, or probate documents
- The death certificate
- Prior appraisals
- Surveys and floor plans
- Property tax bills
- Insurance records
- Permits
- Construction plans
- Receipts for renovations and major repairs
- Inspection reports
- Leases and rental records
- Homeowners’ or condominium association documents
- Mortgage and lien information
- Utility bills
- Photographs from old listings or family records
Old real estate listings can be especially helpful because they may show the property’s former condition, room configuration, finishes, and improvements.
Secure and Protect the Property
An inherited home may remain vacant while the estate is being handled. Vacant properties can face increased risks involving leaks, storms, vandalism, theft, pests, or unnoticed maintenance problems.
Consider taking the following steps:
- Change or rekey the locks
- Confirm that the property is properly insured
- Notify the insurance company if the home is vacant
- Keep utilities active when necessary
- Check the air conditioning, plumbing, roof, and electrical systems
- Arrange regular property inspections
- Forward mail
- Maintain the landscaping
- Remove perishable food and trash
- Secure valuables and important documents
Do not assume the existing homeowner’s insurance policy will automatically provide the same coverage after the owner’s death or while the home is vacant. Speak directly with a qualified insurance professional.
Avoid Rushing Into a Sale
Some inherited properties should be sold quickly. Others should not.
Before accepting an investor’s cash offer or selecting a listing price, understand the property’s market value. An inherited property may need repairs, but that does not automatically mean it should be sold at a steep discount.
An independent appraisal can help the heirs, executor, attorneys, accountants, and other decision-makers understand the property’s value and evaluate available options.
It may also help when:
- Multiple heirs need to divide the estate
- One beneficiary wants to buy out another
- The property will be listed for sale
- A cash offer has been received
- The property will be retained as a rental
- The estate requires documentation
- A tax professional requests a date-of-death value
- Family members disagree about value
Speak With the Right Professionals
Estate and inheritance matters can involve appraisal, legal, accounting, insurance, probate, and property-management issues.
Depending on the situation, you may need assistance from:
- An estate or probate attorney
- A certified public accountant or tax professional
- A qualified real estate appraiser
- An insurance professional
- A real estate agent
- A property manager
- A contractor or home inspector
An appraiser provides an independent opinion of value. An attorney and tax professional should advise you regarding legal ownership, probate procedures, filing requirements, tax basis, exclusions, and the tax consequences of keeping or selling the property.
The Best Time to Prepare Is Now
It is possible to complete a retrospective estate appraisal years after the date of death. However, the assignment may become more difficult as time passes, records disappear, family members forget details, and the property changes.
The smartest approach is to preserve the evidence early.
Take photographs. Record videos. Save documents. Track repairs. Keep receipts. Obtain professional advice before making major decisions.
You may not need every record you collect.
But years from now, when an accountant, attorney, buyer, appraiser, or family member asks what the property looked like and what it was worth when it was inherited, you will be glad you documented it.
For what it’s worth, take the photographs first. You can clean out the garage tomorrow.
Need an Estate or Date-of-Death Appraisal?
Empire Appraisal Group provides independent real estate appraisal services for estates, inherited properties, retrospective valuations, family settlements, tax planning, and other non-lending purposes.
We can help develop a well-supported opinion of value based on the property, available historical records, comparable market data, and the relevant effective date.
Contact Empire Appraisal Group to discuss your property and the type of appraisal documentation you may need.
This article is provided for general informational purposes and is not legal, tax, or accounting advice. Estate and tax rules can vary based on the facts, ownership structure, jurisdiction, and year involved. Consult a qualified attorney and tax professional regarding your specific circumstances.