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The primary purpose for the stepped-up basis rule under IRC § 1014 is so that, for estates without exemptions to the federal government's estate tax on transfers of wealth at death, the estate's assets are taxed only by estate taxes and not also on the capital gains during the decedent's lifetime.
You can sell your primary residence and avoid paying capital gains taxes on the first $250,000 of your profits if your tax-filing status is single, and up to $500,000 if married and filing jointly.
Sale price ($500,000) - Stepped-up original cost basis ($500,000) = $0.00 taxable capital gains On the other hand say that you hold the house for a year, during which time the price of this house ...
Stepped-up basis is a tax provision that allows heirs to reduce their capital gains taxes. When someone inherits property and investments, the IRS resets the market value of these assets to their ...
From 1913 to 1921, capital gains were taxed at ordinary rates, initially up to a maximum rate of 7%. [11] The Revenue Act of 1921 allowed a tax rate of 12.5% gain for assets held at least two years. [11] From 1934 to 1941, taxpayers could exclude from taxation up to 70% of gains on assets held 1, 2, 5, and 10 years. [11]
A single person who nets $620,000 from their home sale could pay capital gains taxes on up to $370,000 of the profits, while a married couple who files their taxes jointly could end up owing taxes ...
The remainder of any gain realized is considered long-term capital gain, provided the property was held over a year, and is taxed at a maximum rate of 15% for 2010-2012, and 20% for 2013 and thereafter. If Section 1245 or Section 1250 property is held one year or less, any gain on its sale or exchange is taxed as ordinary income.
These capital gains taxes are then calculated using what’s known as a stepped-up cost basis. … Continue reading → The post Capital Gains on Inherited Property appeared first on SmartAsset Blog.
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