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Rick
Rick, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3317
Experience:  CPA
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My question is regarding capital gains taxes on a second

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My question is regarding capital gains taxes on a second home for seniors, probably in their eighties. I have heard there is a provision about the basis being “stepped up” at the time of death. In other words, with the basis increased, or stepped up, the amount of taxable gains tax will be smaller or less. what can you tell me about this.
JA: What are the assets or property for this capital gain?
Customer: A residential second home in California.
JA: Anything else you want the Accountant to know before I connect you?
Customer: Well, this would be for a second home owned by my husband and me (25%) and my son and wife (75%). So when we die, will the basis be stepped up (we are now in early 80s). And does it matter if we are listed on the title and mortgage? We plan not to be listed but have to have a written beneficial ownership agreement.

Hello, you are correct, your heirs will receive a "step up" in basis if they inherit your home after you pass. This means, for example, if/when they later sell, they will pay taxes on the difference between the stepped up basis and the selling price, which is less tax. The stepped up basis generally equals the fair market value at inheritance.

Customer: replied 17 days ago.
Thank you. And to confirm, this is true for a SECOND home, not primary residence with shared equity.

Yes, that is true for a second home.

You're welcome! I hope to hear from you again if needed. Take care and be safe.

Customer: replied 17 days ago.
Thank you so much. This was easy.

My pleasure!

Rick and 2 other Tax Specialists are ready to help you

Thank you for your rating. The step up in basis generally applies to most assets, including a second home. Keep in mind though, that the transfer of ownership must take place at inheritance, and not before, so if the second home is already owned, then it cannot also be inherited. In the case of co-ownership, it is possible for a partial step up (25%).