My step-father passed away on 3/1/2023 and my mother has moved to another state to live closer to family. She is selling their (now her) house in Colorado they lived in together for 20 years. As I understand it, she has until 3/1/2025 (2 years from date of death) to sell the house and exclude up to 500k in cap gains. After that, only $250k. The original basis was $300k in 2003, market value when he died in 2023 is $800k, I expect the market value in 2025 to be $850k.
I don't understand what her options are after 3/1/2025 if the house doesn't sell by then. Can she:
- Take a step-up in cost basis (on his original half of the house) to reduce her tax liability? If so, how long does she have to do that?
- Or should she considered transferring ownership with a quit claim deed to a family member before 3/1/2025 if the house doesn't sell so she can get the full $500k benefit?
- Or is her best option to stick with the max $250k benefit?
