Finance category
Mortgage, loan, investing, tax, and money calculators.
Stepped-Up Basis Calculator
Inheriting property 'steps up' your basis to fair market value at date of death — wiping out capital gain accumulated during the decedent's ownership. Massive tax break on appreciated real estate. This calculator sizes the benefit.
Tax savings from step-up
$74,000
Basis step-up amount
$370,000
Gain on sale after step-up
$50,000
Gain without step-up (carryover basis)
$420,000
How the math works
$80K original cost, $450K at death, $500K sale: step-up = $370K. Without step-up, $420K gain × 20% = $84K tax. With step-up, only $50K gain × 20% = $10K tax. Saves $74K.
Major reason to let appreciated property pass at death vs gift during life. Document valuation carefully at death — establishes basis for all future heirs.
How to Use
- Enter decedent's original cost, FMV at death, and eventual sale price.
- See basis step-up value and tax savings.
Frequently Asked Questions
Do I need appraisal at death?
Yes. Get appraisal dated within 6 months of death to establish FMV as new basis. Cost $400-$700. Protects against IRS audit. Also: alternate valuation 6 months post-death available in some cases.
Community property vs joint tenants?
Community property (CA, WA, etc.): full step-up at death of one spouse. Joint tenants: half step-up (only decedent's portion). Huge difference — consult CPA before structuring.
What about gifts while alive?
Gifts during life retain donor's basis (carryover). NO step-up. Inheriting at death gets step-up. Wait until death to transfer appreciated property when possible.
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