The Six-Month Rule: How the Alternate Valuation Date Can Save Virginia Estates Thousands
Markets move. If values dip after a loved one’s passing, the IRS may let an executor elect the Alternate Valuation Date (AVD)—a second, optional valuation exactly six months after the date of death. If it reduces both the gross estate value and the estate tax due, this election can meaningfully lower federal estate taxes. The authority is in Internal Revenue Code §2032. Legal Information Institute
When AVD helps (and when it doesn’t)
Picture a McLean property worth $1.6M at death. Six months later, comparable homes are trading near $1.45M. If the estate is otherwise taxable, electing AVD can trim both the reported estate value and the tax bill. On the other hand, if values rise—or if only part of the estate would decline—AVD may provide no benefit (and you can’t cherry-pick assets; the election applies to the overall estate as the statute outlines). Executors should evaluate both dates before deciding. Legal Information Institute
What documentation the IRS expects
AVD isn’t a “shortcut.” You still need a USPAP-compliant appraisal with an effective date exactly six months after death (or at disposition for assets sold sooner), supported by contemporaneous market data and clear adjustments. A letter won’t suffice, and Virginia tax authorities have taken the same view in basis disputes. The Appraisal Foundation
Virginia context
Virginia currently has no state estate or inheritance tax, so the AVD decision is purely about federal estate tax outcomes. Still, many Northern Virginia estates cross federal thresholds due to high property values; careful appraisal work can materially influence results. Check the latest IRS thresholds with your CPA, because they can change over time. tax.virginia.gov
How professionals evaluate AVD for you
A certified appraiser can model two retrospective valuations—(1) the date of death and (2) the six-month date—so your CPA can quantify the tax impact. This means analyzing two market snapshots, selecting and adjusting different sets of comparable sales, and documenting any market trend between the two dates. It also means aligning with your attorney to ensure the election is made correctly on the return.
Takeaway: AVD is one of the few levers executors can legally pull to reduce federal estate tax in a falling market—but it only works when backed by rigorous, professional appraisal evidence. Legal Information Institute