NOVEMBER 2024
Welcome to this month's edition of the Tax and Business Alert. Our goal is to provide you with current articles on various tax and business topics. The articles are intended to keep you up to date on trends and issues that may impact your business and personal financial affairs.  Please contact us if you have questions about any of the issues discussed.

Previous Issue

 

SENIORS: A TAXWISE ALTERNATIVE TO SELLING YOUR APPRECIATED HOME

I

n recent years, the residential real estate market has surged in many areas. That means many homes have greatly appreciated. If you're a senior thinking about selling your appreciated home, the transaction may bring a painful tax bill. One alternative to consider is aging in place.

If you remain in your home until your death, the tax basis of your property is adjusted to its fair market value as of your date of death or six months later, depending on your executor's choice. When your heirs sell the home, they'll owe federal capital gains tax only on appreciation that occurs after this date.

If you co-own the home with your spouse, the tax basis of your portion will be stepped up when you die, and the tax basis of the remaining portion will be stepped up when your spouse dies. Chances are your heirs will owe little or no federal capital gains tax when the property is sold. In community property states, the tax basis of the entire residence will be stepped up when the first spouse dies. So, the surviving spouse can then sell the home and owe little or no federal capital gains tax.

Important: If these taxpayer-friendly rules for basis step-up also apply in your state, the aging-in-place strategy will work for state income tax purposes, too.

Tax planning usually calls for action. But this is one situation where it might make sense to hang tight. Contact your tax advisor to determine if this strategy is right for you and your family.




Important Information: The information contained in this newsletter was not intended or written to be used and cannot be used for the purpose of (1) avoiding tax—related penalties prescribed by the Internal Revenue Code or (2) promoting or marketing any tax—related matter addressed herein.

The Tax and Business Alert is designed to provide accurate information regarding the subject matter covered. However, before completing any significant transactions based on the information contained herein, please contact us for advice on how the information applies in your specific situation. Tax and Business Alert is a trademark used herein under license. © Copyright 2024.