The living spouse would use the following as a cost basis for the sale of their home after the death of their spouse, assuming both names were on the deed before death.
- Half of the fair market value on the date of death (stepped up basis)
- Half of the actual cost of the home, including original cost, purchase expenses, capital improvements
- Add 1 & 2 together to arrive at the full cost basis to enter when completing a sale of your home.
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