Like most people, your estate plan probably includes leaving any real property you own to your family. That means you also want to leave them with as small a tax bill as possible on any property they inherit from you. Tax and estate planning can be complicated. Often, without the help of an estate planning attorney, bequeathing or inheriting real estate in Georgia can have costly tax consequences like capital gains. A capital gain occurs when real estate is sold for more than its original purchase price. This is known as its basis. If you give someone property during your lifetime, it retains its original (or carryover) basis.
If your future plans include passing property to your heirs, the step-up tax advantage may work in their favor. A carefully designed estate plan allows you to choose where your assets go after your demise. It also lets your heirs avoid the hassle of probate court and limits any potential tax liabilities for your heirs. For example, if your will includes leaving your real property to your spouse or child, they may receive a step-up in basis. The stepped-up basis decreases the capital gains taxes when heirs choose to sell an inherited property.
When real estate is inherited, the step-up basis means it is taxed at its fair market at the time of the inheritance (i.e., the date of death) rather than at the time of its original purchase. This typically results in less capital gains and in many cases, no capital gain if the property is sold shortly after it is inherited. So, a home that has appreciated is taxed at its current value which can greatly reduce the amount of taxes owed on the potential profit from a real estate sale.
Navigating complex tax and estate laws on your own can be difficult. The estate planning attorneys at Grissom Law, LLC have the knowledge and expertise you need when it comes to the tax laws that govern property and inheritance tax. Call us today for an estate planning consultation. We can help you ensure your friends and family inherit everything you want them to have without inheriting a huge tax liability.
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This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.