Quote:
Originally Posted by 2bindenver
Always better tax-wise to inherit property - the property gets current market value - not the original purchase price plus upgrades.
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That's incorrect.
The basis of a person receiving a home as a gift is stepped up by the amount of gift tax the giver paid when the property was transferred. (See below). It essence, the basis will be the same whether property is received through inheritence or gifting.
From the IRS website (
Publication 551 (5/2002), Basis of Assets)
Example 1:
You were given a house in 1976 with an FMV of $21,000. The donor's adjusted basis was $20,000. The donor paid a gift tax of $500. Your basis is $20,500, the donor's adjusted basis plus the gift tax paid.
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