What You Should Know About Long Term Capital Gains Tax and New Basis At Death


Attorney Thomas B. Burton explains how you get one shot at new basis at death and why it is wise to not waste this opportunity to save on capital gains tax for your heirs when planning your estate plan disposition for highly appreciated items.


Transcript of Video: What You Should Know About Long Term Capital Gains Tax and New Basis At Death

What is new basis at death or a step-up

in basis at death this is a very

important concept for your estate

planning and one that many people don't

think about there are good reasons for

leaving certain assets to your children

or heirs at death versus gifting it

outright during life for instance real

estate is often a highly appreciated

asset let's take an example of a home

bought in 1950 for $50,000 that let's

say your grandparents bought then they pass

away in 2017 in the home is worth

$500,000 if they had given the asset to

their children in 2016 the children

would have received the basis they

bought it at of $50,000 if instead they

left it to the children in their will or

trust in 2017 the children would be

entitled to new basis or stepped-up

basis at death this means the children

could sell the home for the fair market

value of $500,000 and owe no capital

gains tax with the long-term capital

gains tax rate of 15% this is a

significant tax savings if instead the

children were deeded the home in 2016

and they sold it for $500,000 after their

parents passed away they would owe the

difference between $500,000 and $50,000

which is $450,000

at a fifteen percent

capital gains tax rate now that's a

simplified example but the point of this

is to think carefully about which assets

that you give away during life versus

giving away at death you get one chance

at the stepped-up basis at death and

it's wise to make good use of it please

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thank you for watching!

© 2018 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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