What is a Stepped-Up Basis?

Many people have heard the term “stepped up basis” but are not sure what it means. A stepped-up basis is when a homeowner passes away, their home’s value is reset for their heirs. The heirs pay capital gains only on the difference between the new market value at the time of the owner’s passing and the selling price now or in the future.
Here is a simple example:
Purchased a home for: $400,000
Value when owner dies: $1,200,000

Stepped-up basis for heirs: $1,200,000

This allows the heirs to only pay capital gains when they sell on the amount over $1,200,000. A potential huge tax saving of possibly a hundred thousand dollars!

Often a Realtor will do an evaluation as of the date of death. Your tax advisor may recommend an appraiser to complete the evaluation. Only an appraiser can do an appraisal and a Realtor an estimate of market value. Always consult your tax advisor before deciding which is right for you and if you have any potential taxes due.

The Millman Team can do a date of passing evaluation for you. Even going back in time or recommend an experienced local appraiser. Let us know how we can help.

---

Real Estate Market Summer 2023

Low inventory (homes for sale)
+

More qualified buyers looking to buy

=

Seller’s market with rising prices!

The best time to sell is now to the end of August and then mid September through October.