Inherited House, Who Decides Cost Basis?

[AZ-Tax]

Single taxpayer passes March of 2014. One of the 4 heirs contacted me for the first time last week. Does the Personal Representative decide on the cost basis or does the tax preparer?

[Uncle Sam]

Who Decides Cost Basis?

Neither -

It's the Fair Market Value on date of death or alternate valuation date.

[ATSMAN]

My recommendation to the heir(s) and personal rep would be to pay a real estate agent and they can look up the Multiple Listing Service and give you an approximate valuation. If that is not possible then the next best way is to get the county property tax bills that will have the assessed value of the property. Generally the assessed value is lower than the comps but IRS will accept that. You got to do it soon because the FMV is as of the date of death not 2 year after!

[Lion]

With four heirs, I'd really stay arms length from any basis discussion! In fact, I'd recommend a formal appraisal, probably in writing/email and save it with their responses in my file. If they go with a friendly, local realtor or tax bills, that's great, but it wasn't my rec to them so they can't drag me into any bickering....

[Roberts]

Single taxpayer passes March of 2014. One of the 4 heirs contacted me for the first time last week. Does the Personal Representative decide on the cost basis or does the tax preparer?

I'd say the Personal Representative takes the necessary steps to determine the fair market value. That's not my job and I'm not an expert at real estate valuation.

[ATSMAN]

With four heirs, I'd really stay arms length from any basis discussion! In fact, I'd recommend a formal appraisal, probably in writing/email and save it with their responses in my file. If they go with a friendly, local realtor or tax bills, that's great, but it wasn't my rec to them so they can't drag me into any bickering....

Formal appraisal fees run between $350 to $500 for a single family house in my area. A friendly local real estate person will probably do the comps for free if you are going to list that house for sale at some point in time.

As far as taxpayers dragging us into their bickering. That is a hazard of this profession. Ask me about divorcing couples!

A good engagement letter should take care of this issue. But in America anyone can sue!

[taxea]

to get an accurate value they should have an appraisal done for the date of death or six months after.

[ATSMAN]

to get an accurate value they should have an appraisal done for the date of death or six months after.

Correct.

Unless the property is in a hot real estate area the average prices have been stable for almost a year. The average increase in my area in 2014 over 2013 was a measly 2%!