My mother who died in June 2023 owned a rental home that recently sold. It seems natural to compute the step-up basis value (i.e., the value of the home at the time of my mom’s death) as the gross sale price less the cost of improvements that the estate incurred prior to the sale (and of course after my Mom’s death).
Is this right? I ask because computing the home basis in this way will result in a capital loss on the home sale equal to the closing costs that the estate paid when the home sold. That seems too good to be true.
Thanks in advance for your help.
