So let's say you have a primary residence that was purchased for $50,000 with no money having been spent on improvements and that it's now worth $750,000 according to the tax appraisal district that it's in. If the owner dies and then the property is inherited and the heirs sell immediately they don't have to pay capital gains since the purchase price is, from that point on, considered to be $750,000.
But let's say that a bank appraiser thinks the property is worth $2-3 million instead of the $750,000 the tax appraiser thinks it's worth. It seems like the the capital gains tax break you get is based on what the tax appraiser thinks the property is worth - not the bank appraiser.
My question is... would it be worthwhile to challenge the city's low appraisal of the property near the end of the original owner's life to maximize the capital gains tax break that the heirs of the property might get?