What is stepped up basis on inherited property?

Question

For context, I inherited property that the owner held for many years and the original purchase records are incomplete. For context, I may eventually sell the property, so I need to understand which value becomes my tax basis and what records will support it. My goal is to sort out the reporting before the next tax filing, rather than first learning about a mistake from a notice.

Soradin · Accepted Answer

It generally means the tax basis is adjusted to the property's value at death rather than the deceased owner's original cost. For tax reporting purposes, the federal income tax basis of inherited property is commonly tied to its fair market value at the date of death, though exceptions and alternate valuation rules can apply. For tax reporting purposes, accurate valuation records are important when the property is later sold. Retain the documents that support the dates, amounts, ownership, and basis, and ask a qualified tax professional to check the taxpayer, form, basis, and deadline against those records.

What is stepped up basis on inherited property?

Soradin

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