Step Up In Basis

Learn about step-up in basis and how it affects inherited property values for tax purposes. Discover key estate planning considerations and tax implications.

What is step-up in basis and how does it work?

Step-up in basis is a tax rule that adjusts the value of inherited property to its fair market value at the time of the owner's death. This means beneficiaries can potentially avoid capital gains taxes on appreciation that occurred during the deceased owner's lifetime. The stepped-up value becomes the new cost basis for calculating future gains or losses when the property is sold.