Agent

How does stepped-up basis for inherited property work?

Different states have different interpretations

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DEAR BOB: I know you have tackled this issue before, but I still don't understand. I'm sure many other readers are also interested. What does stepped-up basis mean for a house? My late husband and I owned our home as joint tenants with right of survivorship. He died in 2003. We bought our home in 1978 for about $200,000. Today, it is worth at least $650,000. What is my basis so I can see if I will owe any tax should I decide to sell? – Doris F. DEAR DORIS: The exact answer depends on the state where the property is located. If it is a non-community-property state, you receive a new stepped-up basis to market value on the 50 percent of the home you received from your late husband, plus your original 50 percent share. Purchase Bob Bruss reports online. To illustrate, if the house was worth $650,000 when your husband died, you received a new stepped-up basis on "his half" of the house at $325,000, plus your original $100,000 basis, for a $425,000 total new stepped-up basis. Howe...