We have few clients who have Taxes when inheriting your childhood home. And in some of these cases, a large tax bill as well. While there is a step-up in basis when property is inherited, there are a few exceptions and some subtle distinctions to keep in mind when you inherit property.
What does that mean for you? We have created this guide addresses some of the most common issues that arise for a client trying to understand their cost basis in property they inherited.
The most common issues that we see that result in large tax bills are:
- When the property gifted within one year of the of the decedent's death and
- The property being in a IRA. 401K or irrevocable trust.
Even if you avoided the two pitfalls listed above, there are several other factors that can impact your cost basis and subsequently your tax bill:
- The impact of living in a community property state
- Types of property that receive a step-up
- How selecting an alternate valuation date can affect your situation
- Differences between simple ownership, JTWROS, and tenants in common
Don’t hesitate to contact us and schedule a time to discuss this further.
