Behold the Step-Up in Basis!
Updated: Oct 9, 2019
Behold the step-up in basis! Property owned at death is valued at fair market value, regardless of when the decedent obtained it, eliminating capital gains, and saving heirs in capital gains taxes. Had the decedent sold the property during his lifetime, he would have had to pay capital gains tax on any increase in the property's value. The capital gains taxes are forgiven when he dies, however, because property owned at death receives a step-up in basis.