Date-of-Death Appraisals in Arizona: What Executors Need to Know

When a property owner passes away, one of the first questions the executor (or personal representative) will face is: "What was the property worth on the date they died?"

This isn't just a curiosity question. The IRS uses this value — the date-of-death fair market value — to determine the estate's tax liability and to establish the "stepped-up basis" for anyone who inherits the property.

Getting this number right can save heirs tens of thousands of dollars in capital gains taxes when they eventually sell. Getting it wrong — or not getting it at all — can trigger audits, disputes, and overpayment.

What Is a Date-of-Death Appraisal?

A date-of-death appraisal (also called a "retrospective appraisal") is a licensed appraiser's opinion of what a property was worth on a specific past date — the date the owner passed away.

The appraiser researches comparable sales that were available as of that date and develops a value opinion using market conditions that existed at that time — not today's market.

For example, if a property owner passed away on March 15, 2024, the appraiser would look at sales from roughly March 2023 through March 2024 to determine what a willing buyer would have paid on that specific date.

Why It Matters: The Step-Up in Basis

Here's why this number is so important:

That's a difference of $300,000 in taxable gains — potentially $45,000–$70,000 in taxes saved — all because a $175 appraisal established the proper stepped-up basis.

When to Order a Date-of-Death Appraisal

• As soon as practical after the death. The closer the appraisal is to the actual date, the easier it is to find relevant comparable sales. Waiting years makes the work harder and potentially less defensible.
• Before filing the estate tax return (IRS Form 706). Estates valued over the federal exemption ($13.61M in 2024) must file Form 706. The property value on that form needs to be supported by a licensed appraisal.
• Before selling inherited property. Even for estates below the federal exemption, establishing the stepped-up basis before sale protects heirs from overpaying capital gains taxes.
• For estate distribution disputes. When multiple heirs disagree about what a property is worth, a licensed retrospective appraisal provides an objective, defensible number.

What the Appraiser Needs From You

• Property address
• Date of death (the "effective date" of the appraisal)
• Any known condition issues as of that date (major renovations, damage, etc.)
• Whether the property was the decedent's primary residence, rental, or vacant

If you have photos of the property from around that time, those are helpful but not required. The appraiser will use public records, MLS data, and market conditions as of the effective date.

Desktop vs. Full Interior for Date-of-Death

Because a date-of-death appraisal values the property at a past date, a physical inspection of the property's current condition is often less relevant. The appraiser is reconstructing what the market looked like on the effective date using historical data.

For this reason, a desktop retrospective appraisal is typically appropriate for date-of-death work — and it's significantly faster and more affordable than a full interior.

A full interior may be needed if:

• The estate is above the federal exemption threshold (high audit risk)
• The property has been substantially modified since the date of death
• The IRS has specifically requested a full appraisal

Arizona-Specific Considerations

Arizona is a disclosure state, which means property sale prices are public record. This is actually an advantage for retrospective appraisals — the appraiser has access to verified comparable sale data, making the valuation more reliable and defensible than in non-disclosure states where prices are harder to verify.

Arizona also has no state estate tax, so the primary concern for most Arizona estates is the federal step-up in basis and potential capital gains — not state estate tax.

What It Costs — and What It Saves

A desktop date-of-death appraisal costs $175. The potential capital gains tax savings for the heirs is typically $20,000–$100,000+ depending on the property's appreciation since the decedent originally purchased it.

There is no scenario where the cost of the appraisal outweighs the tax benefit of establishing a proper stepped-up basis. It's one of the highest-ROI financial decisions an executor can make.

Next Day Desktop Valuations provides licensed retrospective and date-of-death appraisals for Arizona properties at $175. Provide the address and effective date, and we'll deliver the report within 24–48 hours. Order a retrospective appraisal →