Social Media, “Step-up Basis” and President Biden
Recent social media posts have referenced comments made by President Joe Biden during his campaign about possible changes to the U.S. Tax Code.
An example of one such post is what is referred to as the “step-up in basis rule.”
Under present tax law in the United States, when you die, the qualified stocks, real estate, and other capital assets you leave to your heirs get their original cost basis wiped out entirely.
This means heirs can value the property at its “stepped-up” or fair-market value on the date they inherited the asset, rather than valuing the property at its original purchase.
For example: An heir inherits a home, purchased years ago for $50,000, that is now worth $250,000. The heir receives a “step up” in the original cost basis of the home from $50,000 to $250,000.
Without the “step-up in basis” rule, if the inherited home were sold, the capital gains generated upon the sale would be much higher, increasing the capital gains taxes paid by a decedent’s heirs.
Political pundits and tax experts agree the Biden administration has many things on its agenda ahead of taxes, namely the coronavirus pandemic and its vaccination rollout, as well as shoring up the shaky economy and stabilizing the unequal jobs recovery.
Provided as a Government Affairs service of the Cincinnati Area Board of REALTORS®.