FMV of home in an estate - all cash deal

[jstrobel]

We're trying to determine the FMV on my mom's home. She died August 5, 2022. Signed the P&S for the sale January 31, 2023 with closing on or before February 16, 2023. Does that put it in the 6 month window? All cash transaction so there is no appraisal. Assessed value of the property used for probate court's inventory of fiduciary filing. Is the FMV the net sale price of the home?

Regards,

Jeff

[Anonymous_ · Accepted solution]

There is no "6 month window". The alternate valuation date, which is the 6-month period after the date of death, is used strictly when an estate tax return (Form 706) is required to be filed and the alternate valuation will result in a lower estate tax liability.

In this instance, the IRS would not be required to accept anything less than an appraisal by a certified real estate appraiser as evidence of the fair market value on the date of death.

[JulieS]

No, the basis of the home is the fair market value (FMV) on the date of death, or the alternate valuation date. 

As KrupaCreative points out, there is no "six month window" in the IRS regulations.

Here is an excerpt from the IRS on this topic:

"The basis of property inherited from a decedent is generally one of the following:

• The fair market value (FMV) of the property on the date of the decedent's death (whether or not the executor of the estate files an estate tax return).
• The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return."

Click here to read more. 

[Anonymous_]

It should also be noted that the alternate valuation date cannot be used, even if filing a Form 706, unless the election will decrease both the value of the gross estate and the estate taxes payable.

See Section 2032(c)