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When you inherit property, the IRS applies what is known as a stepped-up basis to that asset. ... The stepped-up cost basis means that it is relatively rare for heirs to pay significant taxes on ...
When you inherit a property, your cost basis is “stepped-up” to the property’s fair market value at the time you inherit it. Generally, this is the property’s value on the date of death.
Section 2032 provides an alternate method of determining the property's new basis. If the property is not disposed of within six months of the decedent's death, the executor may elect to use the property's fair market value six months after the date of death but only if such an election results in a decrease in the value of the gross estate. [2]
Inheriting a home or other property can increase the value of your estate but it can also result in tax consequences. If the property you inherit has appreciated in value since the original owner ...
Under the stepped-up basis rule, [8] for an individual who inherits a capital asset, the cost basis is "stepped up" to its fair market value of the property at the time of the inheritance. When eventually sold, the capital gain or loss is only the difference in value from this stepped-up basis.
Basis (or cost basis), as used in United States tax law, is the original cost of property, adjusted for factors such as depreciation. When a property is sold, the taxpayer pays/(saves) taxes on a capital gain /(loss) that equals the amount realized on the sale minus the sold property's basis.
However, when you inherit property, the cost basis is typically “stepped up,” or adjusted, to be the fair market value of the property on the date of the decedent’s death. (In some cases it ...
Specifically, you'll need to know the property's fair market value (FMV) to calculate your cost basis for tax purposes. How do you determine the fair market value of inherited property? There are ...