Estate & Probate Appraisal › Step-Up in Basis Appraisal
What is a step-up in basis appraisal?
A step-up in basis appraisal establishes the fair market value of inherited property as of the owner's date of death, resetting the property's tax basis to that value. This higher basis minimizes the capital gains tax an heir owes when the property is later sold. The IRS requires credible support from a certified appraiser.
For long-held Baltimore property — a rowhouse bought decades ago, or family land — the step-up can be the single largest tax saving in the entire estate. But it only holds if the date-of-death value is supported by a defensible appraisal, not an estimate.
How the step-up reduces capital gains tax
Capital gains tax is charged on the difference between the sale price and the tax basis. A step-up resets the basis from the original purchase price to the date-of-death value, erasing decades of appreciation for tax purposes. Heirs who sell near that value may owe little or no capital gains tax.
Why you need an appraisal to claim it
The IRS requires credible documentation of the date-of-death fair market value to support the new basis. A certified, USPAP-compliant appraisal provides that defensible figure. Without it, heirs risk an unsupported basis that can be challenged on audit, potentially increasing the capital gains tax owed on a later sale.
A number the IRS won't second-guess
The whole tax benefit rests on one figure: the date-of-death value. If that number is a Zestimate or a round guess, it's exposed on audit — and the gain the step-up was supposed to erase can come right back. A certified retrospective appraisal, built on comparable sales from the actual period and signed under USPAP, is what makes the stepped-up basis stick.
When should you get it?
Get the appraisal as soon as practical after the owner's death, while records are accessible, even if you don't plan to sell immediately. It documents the date-of-death value for the future. A retrospective appraisal can still establish that value years later, but ordering it early avoids reconstruction later.
Does inherited property in Maryland get a step-up?
Yes. Inherited property receives a stepped-up basis to fair market value at the date of death under federal tax law, which applies in Maryland. A certified date-of-death appraisal documents that value for Baltimore-area property, supporting the heirs' basis for future capital gains reporting.