@44876 wrote:
So I may understand lets' say my cost basis is $350,000 due to improvements. The initial cost was $133,000. It may be assessed today at $1,250,000. If I understand you then when I die their cost basis is $1,250,000 and if they sell the property they only owe taxes of capital gains above $1,250,000. Am I correct?
You need to see a professional, either an accountant with legal training or a lawyer with tax training. Elder law firms specialize in this sort of arrangement and have specialists of both type on staff.
The exact method of transferring the property is important, the wrong kind of deed can subject your kids to extra taxes. There are ways of transferring the property so that it does not pass through probate (life estate, family trust, and so on) but you have to do it properly. If the property is used in business, some methods may not work correctly compared to if you were living in the property.
It's too much money to mess around with.
The simple answer is that they children can inherit with a fully stepped-up basis, if you do it properly.
