Congress, discussing ending step up in basis. Old rule,
beneficiary, inherits parents house. Beneficiary "basis" is current market value. (step up in basis). No taxes due if beneficiary sells house at market, or keeps the house.
Under proposed changes. Beneficiary inherits parents "basis", But here's the "kicker". The transfer of inherited house to beneficiary, is considered a "sale". (This part surprised me!).
So the estate has to pay a capital gain tax on the difference between the market value and the parents original basis. Long term capital gain 20%.
(Congress proposing increasing this).
There might me a 1 million dollar exemption. In California, average homes are priced way more than $1 million. Again, How does the estate pay the
capital gain tax, when there was no sale. Very disturbing.
2nd thought. The proposed ending of step up in basis, also applies to
Stocks, etc.....Beneficiary received equity. Estate must pay capital gain tax on the difference between parents basis and market value. (Again, stock has not been sold)....
Getting very difficult for Parents to will to their children the family home or stock equity, etc....
I expect some of you, will say. It's only a proposal, and most bills do not
pass, so relax and wait. My concern, all three branches of government are
together. So odds of passing are greater.
If this bill passes, it affects in my case, me. Average working stiff. Not the top 1% or $ 400K, income earners...
Thoughts....
beneficiary, inherits parents house. Beneficiary "basis" is current market value. (step up in basis). No taxes due if beneficiary sells house at market, or keeps the house.
Under proposed changes. Beneficiary inherits parents "basis", But here's the "kicker". The transfer of inherited house to beneficiary, is considered a "sale". (This part surprised me!).
So the estate has to pay a capital gain tax on the difference between the market value and the parents original basis. Long term capital gain 20%.
(Congress proposing increasing this).
There might me a 1 million dollar exemption. In California, average homes are priced way more than $1 million. Again, How does the estate pay the
capital gain tax, when there was no sale. Very disturbing.
2nd thought. The proposed ending of step up in basis, also applies to
Stocks, etc.....Beneficiary received equity. Estate must pay capital gain tax on the difference between parents basis and market value. (Again, stock has not been sold)....
Getting very difficult for Parents to will to their children the family home or stock equity, etc....
I expect some of you, will say. It's only a proposal, and most bills do not
pass, so relax and wait. My concern, all three branches of government are
together. So odds of passing are greater.
If this bill passes, it affects in my case, me. Average working stiff. Not the top 1% or $ 400K, income earners...
Thoughts....
