Do my children have to pay capital gains on rental properties i own, when i die?

[DS30 · Accepted solution]

It depends but they will not have to pay any capital gains tax on the property if the property is inherited. They will just get a step-up in the basis to the fair market value (FMV) on the date of passing.

After your children inherit the rental property - they would only have to pay any capital gains taxes between the FMV on the date of inheritance and date of a future sale. (Also Inherited property always qualifies for long-term capital gains treatment (even if held for less than a year)).