Capital Gains

[deonthego]

Dad passed and I  have been hearing that I need to get a step up in basis to minimize Cap Gains tax on the house sale.. Will the info from realtor satisfy this saying how much houses are in the area or do I need a specific type of appraisal? 

[dev145 · Accepted solution]

While not always a requirement, obtaining a formal appraisal for an inherited home is strongly recommended for several key reasons. Primarily, it helps establish the "stepped-up basis" for capital gains taxes, which can significantly minimize future tax liability if the property is sold. Additionally, it ensures fair valuation among multiple beneficiaries, preventing potential disputes. A dated, official appraisal provides an accurate and defensible value, safeguarding against future tax issues and inter-heir conflicts.

[deonthego]

Is there a specific TT or tax form to use for filing the step up in basis when sell the property?

[dev145]

No, you do not need to fill out any specific form. When you report a sell under "Investment and Savings" section, TurboTax will ask "How did you receive this investment",  you select "Inherited" option. Then TurboTax will ask "Fair market value when previous owner passed away" . That is all.  You will not need to fill out any other forms with the tax return. 

I hope this information was helpful!

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