Step-up Basis for Stocks and Property
Do you like paying taxes?
You may not be able to avoid paying taxes when you're alive, but your heirs can.
When you sell property, like stocks or real estate, you pay taxes on the gains. The original purchase price is called the basis.
If you own property when you die, the IRS allows the heirs to change the basis. The new basis becomes the fair market value of the property at the time it was inherited. For stocks, the basis becomes the stock price on the day you die.
This is known as step-up basis.
In addition to lowering your tax bill, it also helps when families hold stock for a long period and don't have records of the original basis.
My dad had a modest brokerage account. He owned stock in one company for over 40 years. This stock has gone through spits, reverse splits, and countless dividends that were reinvested.
He also changed brokerages a couple of times. The original cost basis information did not transfer with the stocks. So for any stock that was purchased in an old brokerage, we have no clue what price he paid for them. Using the step-up basis, we can look at what the price of each stock was on the day he died.
This makes financial and tax planning is much easier.
It also can nearly eliminate taxes owed on this property.
Download your free Estate Map below and start recording assets that may benefit through step-up basis.