Turning my childhood home on the lake into a rental property - need advice

[castlebreakfast]

Can you tell me more about this 'stepped up basis'? I'm not familiar with the term.

Originally Posted by winterharbor59

There’s a book about a way to do this, assuming everyone is on board. “Saving the Family Cottage “. It’s been revised several times. Paperback via Amazon. With your evaluation assumed at .m, & a primary home, capital gains would be about $[emoji[emoji6][emoji6]],[emoji[emoji6][emoji6]][emoji[emoji6][emoji6]][emoji[emoji6][emoji6]] if sold before your parents’ deaths. If sold after their death you get a stepped up basis. Living expenses in Boston area will not be cheap, especially assuming some period of long term care.


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[winterharbor59]

Originally Posted by castlebreakfast

Can you tell me more about this 'stepped up basis'? I'm not familiar with the term.

Re: Stepped up basis.
Any appreciated asset that you own (usually real estate or stocks) & sell is subject to capital gains tax. For most, the tax is 20% of the appreciation. When you die, the inherited asset’s basis is the appraised value at death. ( that’s the stepped up basis)If your heirs sell their basis is the value of the asset at the time of your death. In other words , they get to keep much more of the money. For a long held lake house, the capital gains would be significant, so if financially feasible,it’s advantageous for an elderly couple to hold the property & leave it in their will to their heirs. Best to do a little reading on tax laws before making a decision.


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