Yes, an inherited California house usually needs an appraisal before it is sold, and often more than one kind. A valuation as of the date of death sets the heir's federal tax basis. The value at transfer drives any Proposition 19 property-tax claim. If the estate is in probate, the court's inventory needs an appraisal, and a court-confirmed sale is measured against it.
California property guideUpdated October 17, 2026General information, not legal or tax advice
Most people facing this question are standing in a parent's house that now belongs, on paper or in practice, to them and perhaps to siblings, trying to work out what it is worth and which number actually matters. The word "appraisal" sounds like one task, yet an executor, a successor trustee and an heir may each be asked for a different value, as of a different date, for a different office. This page walks through those values in the order a sale tends to meet them.
Why Inherited Property Needs Its Own Appraisal
An ordinary pre-sale appraisal answers one question: what will the house bring now. An inherited house carries three other questions at once, and each looks to a value set by law rather than by the listing.
The first is federal income-tax basis, the starting figure from which gain on a sale is measured. Under 26 U.S.C. § 1014(a), basis generally rests on fair market value at the date of the decedent's death, not the day the heir took title and not the day of sale. Fair market value, in plain terms, is the price a willing buyer would pay a willing seller, neither forced to act and both reasonably informed.
The second is property tax. A California heir who keeps a parent's home may claim the parent-child exclusion from reassessment, and that claim turns on the home's value at transfer.
The third applies only when the estate is in probate: the court requires an inventory and appraisal, and a court-confirmed sale is tested against that figure.
An heir or executor who puts off the valuation can find it harder, later, to document basis with confidence, and basis is what decides how much of a sale price counts as taxable gain.
The Date-of-Death Appraisal and Federal Basis
Federal law sets the basis of inherited property by a short list. Under 26 U.S.C. § 1014(a), except as that section otherwise provides, the basis of property acquired from a decedent is the fair market value at the date of death; or, where an election is made under 26 U.S.C. § 2032, the value at the date that section prescribes; or the value set under a special-use valuation election; or, to the extent a conservation-easement exclusion applies, the decedent's own basis.
"Stepped-up basis" is the everyday name for the first rule. If a parent bought the house long ago for much less than it was worth at death, the heir's basis is generally the date-of-death value, so gain on a later sale is generally measured from that value rather than from the old purchase price. A "stepped-down basis" is the mirror: if the house was worth less at death than the parent paid, basis is the lower date-of-death value. The IRS Publication 551, Basis of Assets states that, generally, the basis of property inherited from a decedent includes the FMV of the property at the date of the individual's death, or the FMV on the alternate valuation date if the personal representative chooses alternate valuation.
The alternate valuation date is an election made by the executor on the federal estate tax return. Under 26 U.S.C. § 2032, it values property six months after death, or on the date of sale or distribution if that comes first, and it may be made only if it decreases both the gross estate and the estate's tax. Whether it fits a given estate is a question for a CPA, an enrolled agent or a tax attorney.
One more federal point affects timing: under 26 U.S.C. § 1223, an heir whose basis is set under section 1014 who sells within one year after the death is treated as having held the property for more than one year.
Proposition 19 Reassessment and the Appraisal's Role
A "change in ownership," under Rev. & Tax. Code section 60, is a transfer of a present interest in real property worth substantially the same as the full ownership, and it is what normally triggers reassessment. For a parent-child or grandparent-grandchild transfer on or after February 16, 2021, the exclusion from reassessment is Rev. & Tax. Code section 63.2, the Proposition 19 rule.
Its conditions are narrow. The home must have been the parent's principal residence and must become the child's principal residence within one year of the transfer, and the child must file for the homeowners' or disabled veterans' exemption within a year of the transfer; a grandchild qualifies only if all of the grandchild's parents, other than stepparents, who are the grandparents' children have died as of the date of the transfer. An inherited house no heir moves into does not qualify for this exclusion.
Value is where the appraisal comes in. The statute compares the home's fair market value at transfer with the parent's taxable value plus a fixed dollar amount; when market value reaches or exceeds that sum, the excess is added to the taxable value, so the exclusion is only partial. The county assessor's office publishes the amount that currently applies.
Timing matters to a seller. The claim is generally filed within three years after the transfer, or before the property is transferred to a third party, or before an eligible heir stops living there, whichever comes first; alternatively, it is timely if filed within six months after the mailing of a supplemental or escape assessment notice issued because of the transfer. The county assessor's office reviews the claim and publishes its current form and instructions.
When the Probate Court Requires an Appraisal
A personal representative is, in the words of the California Courts' Guide to property after someone dies, "the person responsible for representing the estate in the probate process," appointed by a judge. Under Probate Code section 8800, that person files an inventory and appraisal within four months after letters are first issued to a general personal representative, or within further time the court allows as reasonable. With it comes a certification that a change in ownership statement has been filed, or that the decedent owned no California real property. Rev. & Tax. Code section 480 requires that statement before or with the inventory in probate, and, in other transfers at death, including through a trust, within 150 days after the date of death.
Under Probate Code section 8900, the appraisal is made by the personal representative, a probate referee or an independent expert. A probate referee is an appraiser appointed by the California State Controller's Office; under Probate Code section 8902, the referee generally appraises all property other than what the personal representative appraises.
That figure follows the house into a sale. Under Probate Code section 10309, a court generally will not confirm a private sale unless the property was appraised, with a valuation date, within one year before the confirmation hearing, and the offer is at least 90 percent of that appraised value; a new appraisal may be had if those dates have passed or the court finds the last one too high or too low. When the court has granted full authority under the Independent Administration of Estates Act and no one objects to a notice of proposed action, the sale may proceed without a confirmation hearing; how that works is part of selling during probate.
A house held in a living trust is sold by the successor trustee outside probate court, so the court inventory does not apply, though the date-of-death value still matters for basis. The estate's or trust's attorney explains which authority applies and what the appraisal must cover.
Who Conducts the Appraisal and What to Expect
A California real estate appraiser holds a license or certification issued by the California Bureau of Real Estate Appraisers, which sets education and experience requirements and investigates complaints. A probate referee is a separate role, appointed by the State Controller.
For inherited property, the valuation is usually retrospective: the appraiser gives an opinion of value as of a past date, the date of death, rather than today. That differs from an appraisal ordered for a listing, which looks at the present market.
A report typically contains:
the property's address and legal description
the valuation date
the method used, usually the sales-comparison approach for a house
the comparable sales relied on
the appraiser's opinion of fair market value
That list describes common contents, not a legal requirement. The further back the date of death, the more the appraiser has to reconstruct: what nearby homes sold for then, and what condition the house was in at the time. Photos, repair records and notes from the period help, and the scope of work grows with the gap.
A family deciding how to sell may also want a current-market appraisal or a broker's price opinion. It answers a different question, what the house might bring now, and does not replace the date-of-death value.
How the Appraisal Fits Into the Decision to Sell
Appraised fair market value is a reference point, not a ceiling and not a floor. A house can sell above or below it, depending on the market, how it is sold and its condition. Outside of a court-confirmed probate sale, where the 90 percent rule already described applies, no rule ties the price to the appraisal.
Families selling an inherited house generally choose among three ways:
A listing with a licensed real estate agent. Open-market exposure and competing buyers, at the cost of commissions, preparation, showings and a buyer's loan approval.
A sale by the owner without an agent. No listing commission, but the family carries pricing, marketing, paperwork and negotiation.
A direct sale to a buyer who pays cash and takes the house as it is. A house can be sold in its present condition this way. The tradeoff is price: a direct offer is often lower than what the open market might bring, because the buyer absorbs the repairs, the risk and the expense of reselling. In return, the family prepares less, hosts fewer showings and does not wait on a buyer's lender.
The fuller tradeoffs are laid out in cash offer versus listing, and for a house in rough shape, in selling a house needing repairs. Silver Lining Inherited Property is one buyer from which a family can get an offer for a direct as-is sale, and asking for one carries no obligation to sell.
Whichever buyer is chosen, the estate's authority, any court step, required notices, disclosures, liens and taxes stay the same. Which disclosures a seller owes depends on who is selling and how; the estate's or trust's attorney can explain them.
The useful comparison is net proceeds: the price less commissions, repairs, carrying costs, loan payoffs and closing costs. Setting written offers side by side against that estimate is how a family tells which way fits. The appraisal does not choose the method; it gives everyone, siblings included, a documented baseline to measure offers against.
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Frequently Asked Questions
What is a date-of-death appraisal?
It is a retrospective valuation of the house as of the day the owner died, not the day an heir took title or sells. It documents the fair market value that federal basis generally rests on, as described in the basis section above.
How is inherited property valued for capital gains tax purposes?
Basis is generally the fair market value at the date of death, or the alternate valuation date if the executor elects it and the election's conditions are met. Gain on a sale is generally measured from that basis. Whether a particular sale owes tax is a question for a CPA, an enrolled agent or a tax attorney.
What happens when you inherit a house from your parents?
The next steps depend on how title passes: through probate, a trust or another transfer at death. In each case a change in ownership statement goes to the county, and a date-of-death value matters for basis. The house can then be listed, sold without an agent or sold directly as it is.
Does Proposition 19 affect the appraisal I need?
Yes, if an heir moves in and claims the exclusion. The assessor compares the home's fair market value at transfer with the parent's taxable value plus the statutory amount, so the appraisal shapes the result. The claim is generally due before a sale to a third party, among other limits.
Do I need a separate appraisal for probate and for taxes?
The probate inventory and the federal basis valuation serve different purposes and may be prepared by different people, such as a probate referee and a licensed appraiser. Sometimes one date-of-death value serves both. The estate's attorney can say what each requires.
What are common mistakes with inherited assets?
Common ones include delaying the date-of-death valuation until it is harder to reconstruct, treating the probate appraisal and the tax-basis value as interchangeable, and assuming the assessed value on the property-tax bill equals fair market value.
Can inherited property be sold in its current condition?
Yes, a house can be sold in its present condition. A direct cash buyer usually takes it as it is, though such an offer is often lower than an open-market price. Court steps, notices and disclosure duties stay the same whoever buys.
