What is a Step Up in Basis?
A step up in basis is what happens when an individual inherits an asset, such as a house, from a benefactor. The cost basis of the asset, which is the original value of the asset for tax purposes, is "stepped up" to its fair market value (FMV) at the time of the benefactor's death. This can significantly reduce the capital gains tax owed when the inherited property is sold.
Why Do You Need a Step Up in Basis?
When you or your family inherit a property, the step up in basis can help you save on capital gains tax if you decide to sell the property now or in the future. The capital gains tax is calculated based on the difference between the selling price and the cost basis. With a step up in basis, the cost basis is the FMV of the property at the time of the benefactor's death, not the original purchase price. This can significantly reduce the capital gains tax owed.
How Does a Step Up in Basis Relate to a Date of Death Appraisal?
A Date of Death Appraisal, also known as an estate appraisal, determines the FMV (Fair Market Value) of the real estate at the time of the owner's passing. This appraisal is crucial for establishing the stepped-up basis for tax purposes. It is also known as a retrospective appraisal. The valuation date will be in the past and may not reflect the current market value, depending on how long ago the owner passed.
Why Choose Appraisals of Southwest Florida for Your Estate Appraisal?
Our team of state-licensed real estate appraisers is experienced and knowledgeable about the specific IRS requirements needed for the appraisal. We understand the intricacies involved in evaluating the value of a home or estate during this difficult time. Our approach is both compassionate and professional, ensuring a smooth process for all involved.
Contact Us Today
We're ready to assist you in this challenging time. Give us a call at 239-591-6262 or fill out our free quote request form for your estate and date of death appraisal. We're committed to providing accurate, ethical appraisals that executors, lawyers, CPAs, and tax professionals can rely on.
