The stepped-up basis rules can help ease the capital gains tax bite of an inheritance. Under the rules, when your family member inherits an asset, its tax basis is adjusted, or “stepped up,” to its fair market value at your death. If the heir later sells the asset, he or she will owe capital gains tax only on any appreciation after your death, rather than on the entire gain from when you originally acquired it. However, only certain assets qualify for the step-up, including securities, bank accounts, business interests, investment accounts, real estate and personal property. Retirement assets, such as 401(k) plans or IRAs, don’t. Contact us for additional details.
