Dani Lynn Robison explains how the stepped-up basis rule lets heirs inherit real estate tax-free. A property worth $200,000 that appreciates to $800,000 passes to the next generation with zero capital gains tax owed, even if they sell immediately for the full $800,000.
Here's how wealthy families legally don't pay taxes on real estate growth. Let's say you buy a property for $200,000, and over time it grows to $800,000. That's $600,000 in growth, and normally selling means a big tax bill on that gain. But here's what happens when you pass it off to your kids instead. The IRS resets the value to whatever it's worth when they inherit it. So if they sell it right away for $800,000, they owe nothing. That's $600,000 $100,000 in growth gone from a tax standpoint. It's one of the most powerful parts of owning real estate long term, and most people have never heard of it.
Physicians and High Earners — What Real Estate Can and Can't Do for Your Taxes
