5

The home passed to an heir in 2012. The heir did not have the home appraised at that time.

The heir died in 2017 and the home was sold in 2018.

How do you establish the FMV in 2012?

Notes

  • If the tax assessor market value is acceptable, then the records are easily available.
  • If comps are needed, I have no idea how to get comps that far back.
  • The home is way under the threshold for federal tax purposes (no worries); but may be subject to some minor taxes for state purposes.
  • Did the estate have the house appraised? – mhoran_psprep Nov 25 '18 at 23:12
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    If nothing unusual has been done to the house, then it might be acceptable to take the current market value and adjust for general 'real estate price changes" over the last six years. – DJClayworth Nov 26 '18 at 15:32
  • DJ - see the comment on my answer, the 2012 value seems moot. – JoeTaxpayer Nov 27 '18 at 16:00
10

A real estate agent can easily look up comparable sales during that time. Unfortunately, the time to ask would have been as you were hiring him/her to sell the house, a bit of extra work for their cut. If no agent was used, I'd find one who was willing to charge you a nominal fee to do this. Sales records for 2012, only 6 years ago, are easily found.

Did the heir leave the house to a further beneficiary? In that case the 2012 value is pretty moot, as the value is stepped up again on that most recent death.

Update to respond to comment.

When I die and the house is transferred on my death, it immediately (or up to 6 months later) gets a stepped up basis. The price I paid for it no longer matters. If it's sold by my daughter within that 6 months, there is no capital gain tax due. If it's sold after, but still soon, it would be a rare event that would create a gain. e.g. The house is worth $300K when I die, and a year later it sells for $310. The cost of the sale, the real estate agent, lawyer, etc, is likely to exceed the $10K it gained from the time it was valued.

The bottom line is that 2012 no longer is part of the math, the death and inheritance occurred in 2017.

  • Taxpayer - Yes, the heir left the home to a further beneficiary, and that's why the home was sold. Can you say more about why the 2012 value would be moot, either as a reply to this comment or by editing your original post? – RJo Nov 26 '18 at 21:34
  • @RJo - answer has been updated. – JoeTaxpayer Nov 27 '18 at 14:09
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    @RJo When a taxpayer dies, their basis dies with them. I can't think of any reason the value in 2012 would matter. – David Schwartz Nov 27 '18 at 19:19
  • @David Schwartz - Not clear to me either, but notes from a meeting with a CPA many months ago, when the heir died, indicate need the 2012 value. Maybe it's because the home was originally in a trust. The heir never did the paperwork to transfer the home from trust to the heir's name. That paperwork was finally done during probate for the heir; i.e., so that the home could be sold and the proceeds passed to the heir's beneficiary. – RJo Dec 1 '18 at 21:29

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