Inheritance for the kids?

[ohiwish]

So I leave my house to my daughter in 2024 (I'm gone now) . I bought it in 1993 for $150,000.  The appraised value was $500,000 when she received it in 2024.   She lives in it for 5 years and sells for $650,000. Will she pay CG on her inherited value ($650,000 - 500,000) or my cost value (650,000 - $150,000) ?

[tagteam]

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@ohiwish wrote:

...Will she pay CG on her inherited value ($650,000 - 500,000) or my cost value (650,000 - $150,000) ?

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The former; it would be the difference between the "inherited value" (the fair market value on the date of death) and her selling price.

[tagteam]

Note that she will pay no capital gains tax (in your hypothetical) if she owns and lives in the house as her principal residence for two out of the past five years leading up to the sale (i.e., she can take advantage of the home sale exclusion, $250,000/$500,000).

See https://www.irs.gov/taxtopics/tc701

[ohiwish]

Nice thought - thanks

[fanfare]

You seem to be alive, not gone, since you are posting this question,

If you gift the house to your daughter, her basis is your basis, i.e. $150,000 .

@ohiwish 

[tagteam]

I am fairly certain that was a hypothetical, @fanfare 

[ohiwish]

It was. thanks forclarification.  I thought I came down with something rather drastic.  8>)