The Importance of Appraisal in the Real Estate Probate Process

When someone passes away in Florida leaving real estate as part of their estate, one of the most important steps in the probate process is determining the fair market value of those properties. This step is known as an appraisal and, although sometimes underestimated, it plays a key role in both the distribution of the estate and tax planning.

In this article, we explain why appraisal is crucial during probate, how it’s conducted, what implications it has, and which common mistakes you should avoid to protect the interests of the estate and the heirs.

What Is an Appraisal in the Context of Probate?

A real estate appraisal is the professional estimation of a property’s fair market value as of the date of the owner’s death. In other words, how much the property would reasonably sell for under normal conditions at that time.

This value serves as the basis for several important decisions during the probate process, including:

• Calculating federal estate taxes.
• Equitable distribution among heirs.
• Selling property to divide the estate or pay debts.
• Legal defense in potential family disputes or claims.

Why Is an Appraisal Required or Necessary?

In Florida, while the law does not always mandate a written formal appraisal, legal practice considers it essential for the following reasons:

1. Tax Calculation
   Florida does not impose a state inheritance tax, but the federal government does levy estate taxes on estates exceeding certain thresholds. Having an accurate appraisal can help avoid overpaying (or underpaying) the IRS.
2. Fair Distribution Among Heirs
   When real estate is the most valuable asset in an estate, knowing exactly what it’s worth is essential for fair distribution. For example, if there are several heirs and only one wants to keep the property, the appraisal helps calculate how much they should compensate the others.
3. Property Sale
   If the heirs decide to sell the property, knowing its market value ensures a fair price and informed decision-making.
4. Legal Protection
   A professional appraisal can serve as evidence in court if any heir disputes the property’s value or how the estate was distributed.

How Is a Property Appraised During Probate?

There are two main methods:

• Professional Appraisal
  Conducted by a certified appraiser in Florida, who inspects the property, analyzes the market, and issues a report with the fair market value. This type of appraisal is the most accepted by courts and the IRS.
• Comparative Market Analysis (CMA)
  Sometimes a real estate agent provides an estimated value based on recent sales of similar properties. While useful for a general idea, this does not replace a professional appraisal in formal processes.

When Should the Appraisal Be Done?

Ideally, the appraisal should reflect the property’s value as of the date of the owner’s death. Therefore, if it’s conducted months later, the appraiser must estimate the value retrospectively (a retrospective appraisal).

Doing this at the right time helps avoid confusion and ensures compliance with legal and tax requirements from the beginning of the probate process.

What Properties Must Be Appraised?

Any real estate property that is part of the deceased’s estate may require an appraisal, including:

• Primary residences
• Investment properties
• Vacant land
• Commercial properties

Even if the property is not being sold immediately, its valuation is necessary to complete legal and tax documents required during probate.

Common Mistakes to Avoid

• Not Getting a Professional Appraisal
  Relying on assumptions or informal estimates can lead to long-term legal and tax problems.
• Using Current Values Instead of Date-of-Death Values
  This can distort the “step-up basis” and trigger unnecessary taxes if the heirs sell the property.
• Ignoring Appraisal for Inherited Properties Outside Florida
  If the deceased owned real estate in other states, those properties must also be appraised to meet federal and state requirements.

What Is the “Step-Up Basis” and Why Is It Important?

The step-up basis is an adjustment to the original value of a property when it is inherited. Instead of using the original purchase price, the heir receives the property with a new cost basis: the market value at the time of the owner’s death.

Example:

If a home was purchased in 1990 for $100,000 and its value at the owner’s death in 2023 was $400,000, that $400,000 becomes the new basis for calculating capital gains if the heir sells the home. This means lower taxable gains and thus lower taxes.

This adjustment can only be correctly applied if there is a reliable appraisal.

Can an Appraisal Be Challenged?

Yes. If an heir or interested party believes the value is inaccurate, they can request a second appraisal or file objections in court. In such cases, having an experienced probate and real estate appraiser is essential to support the initial valuation.

How Much Does an Appraisal Cost in Florida?

The cost can vary depending on the type, size, and location of the property but generally ranges from $300 to $700 for residential properties. Commercial or complex properties may have higher fees. This cost can be covered by the estate as part of the probate administrative expenses.

Appraisal is much more than a technical requirement in the probate process—it’s a fundamental tool for ensuring fair distribution, avoiding legal issues, and optimizing the heirs’ tax situation.

Need Help with the Appraisal and Probate of a Property in Florida?

At Jurado & Associates, we have the experience needed to guide you step by step through the probate process, including obtaining accurate appraisals and protecting your legal and financial interests. Email us at [email protected] or call or WhatsApp us at +1 (305) 921-0976 to schedule a consultation. Your peace of mind—and your family’s—is in good hands.