My father passed away in April 2022, my sister and I, who are the sole beneficiaries sold the house in January 2023. We need to determine the FMV of the house for tax purposes. Can we use the appraisal that was done for the sale in January as the FMV, since we did not get an appraisal done soon after my father passed away?
You can use whatever you like, but the IRS will always prefer a date-of-death appraisal.
Unfortunately, the IRS is not concerned with the time period between the date-of-death and the sale of real estate acquired from a decedent unless that time period is very short and there was no chance of any significant appreciation.
An appraisal done several months after the date of death may be accepted (or, more likely, simply never be the subject of a review), but the IRS is only obligated to accept a date-of-death appraisal from a certified real estate appraiser.
You can use whatever you like, but the IRS will always prefer a date-of-death appraisal.
Yes, you can use the appraisal that was done for the sale in January. The time period from April to January is less than a year and the value should not have changed much. You could also use the sale price of the house as the FMV, since that is the FMV.
Other items can be added to the (FMV) cost basis such as any necessary expenses to get the house ready for sale and some of the selling expenses.
Generally, these expenses from the settlement statement can be deducted as selling expenses to add to the cost basis:
We are sorry for the loss of your father.
Unfortunately, the IRS is not concerned with the time period between the date-of-death and the sale of real estate acquired from a decedent unless that time period is very short and there was no chance of any significant appreciation.
An appraisal done several months after the date of death may be accepted (or, more likely, simply never be the subject of a review), but the IRS is only obligated to accept a date-of-death appraisal from a certified real estate appraiser.