Inherited Property–Sell Now or Later?



Have you inherited an apartment building recently? It may be better to sell it now rather than later because of your stepped-up basis. Check with your tax advisor to find out whether it’s best to sell now…

Inherited Property

The basis of property inherited from a decedent is generally one of the following.

  1. The FMV of the property at the date of the individual’s death.
  2. The FMV on the alternate valuation date if the personal representative for the estate chooses to use alternate valuation. For information on the alternate valuation date, see the Instructions for Form 706.
  3. The value under the special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. This method is discussed later.
  4. The decedent’s adjusted basis in land to the extent of the value excluded from the decedent’s taxable estate as a qualified conservation easement. For information on a qualified conservation easement, see the Instructions for Form 706.

If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes.

For more information, see the Instructions for Form 706.

From the IRS website

https://www.irs.gov/publications/p551/ar02.html#en_US_201412_publink1000257012