Real Estate Business Appraisal for Estate Tax

If you are arranging a Real Estate Business appraisal for Estate Tax, start by documenting fair market value and engaging a qualified, USPAP-compliant appraiser. The IRS requires estate assets to be reported at fair market value on the date of death and expects a qualified appraisal to support the number included with `Form 706`; see the IRS guidance in [IRS estate tax guidance](https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax) and valuation rules in [IRS Publication 561](https://www.irs.gov/publications/p561). Professional appraisers commonly use three approaches—income, asset, and market—employing tools such as discounted cash flow, adjusted net asset calculations, and comparable sales; for a clear primer on these methods see [How to Value a Company](https://online.hbs.edu/blog/post/how-to-value-a-company). Courts and valuation practice often favor the income approach for ongoing businesses and income-producing commercial real estate, while asset or market approaches may be preferable when liquidation or local comparables better reflect value. A defensible estate-tax valuation also requires timely documentation and careful disclosure of assumptions. A qualified appraisal should generally be prepared no earlier than 60 days before the valuation date and executors may elect the alternate valuation date six months after death if it lowers estate tax. Expect appraisers to request financial statements, rent rolls, leases, operating expense records, maintenance logs, and detailed asset lists; they will apply discounts for lack of control or lack of marketability for minority interests when appropriate. Commercial and complex real estate appraisals commonly rely on NOI analysis and DCF modeling, typically take several weeks to complete, and can range from roughly $2,000 to $7,000 depending on complexity (national averages are around $2,529 for commercial work). For practical preparation steps and compliance guidance, see our [7 steps for preparing an estate appraisal](/blog/7-steps-for-preparing-an-estate-appraisal), our guide to [USPAP compliance](/blog/uspap-compliant-appraisals), and notes on [when an inventory and appraisal are necessary](/blog/when-is-an-inventory-and-appraisal-necessary-for-estate-planning). This FAQ will answer how valuations are performed, who qualifies to prepare them, timing and filing with `Form 706`, typical timelines and costs, and steps you can take now to generate an IRS-defensible report that protects heirs and minimizes dispute risk.