Gift Basis vs Inherited Basis

BASIS ISSUES

January 8, 2015

Inherited vs Gifted

Why It Matters

Situation• My parents passed away and I now own their home.

• I want to sell it.

• Will I owe taxes?

It Depends

• Was it an inheritance?

• Was it a gift?

Inherited PropertyFMV @ DOD

Example

The Will Names You As Beneficiary

Gifted Property

Lower Of Basis Or FMV

On Date Of Gift

Example

Parents Put The House In Your Name

“Blended” BasisPart Gift, Part Inheritance

Example

50% Ownership Prior To Death

50% After

Summary• Inherited basis is different from

• Gifted basis and also different from

• Blended basis

*** DISCLAIMER ***Taxes suck and there is always another answer. Consult a professional to find out how this information applies to you.

Christopher Farrell, [email protected]

@Goldcocpa