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Categories: General Tax Terms

Step-Up in Basis refers to an adjustment in the value of an asset for tax purposes when it is inherited.

When a person inherits property, the tax basis of that property is "stepped up" to its fair market value at the date of the original owner’s death, rather than the original purchase price. This adjustment can significantly reduce capital gains taxes when the heir decides to sell the inherited asset.

For example, if a parent bought a house for $200,000 and it is worth $500,000 at the time of their death, the heir’s basis in the house becomes $500,000. If the heir sells the house for $510,000, they would only pay capital gains tax on the $10,000 gain, rather than $310,000 if the original basis had been used.

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    Step-Up in Basis for Inherited Assets means when you inherit property, its value resets to the market price at the time of inheritance, making your tax bill lighter and life brighter!
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