cost basis

Forum|Forum|2 years ago
September 6, 2023
17 replies
75 views

In a jointly owned property does a surviving spouse get a step up in cost basis?

rjs

Level 15

Two weeks ago you asked about stepped up basis on a property placed in a trust. Are you now asking about the same property or a different property? Please clarify who the owners of the property were, how each owner acquired his or her interest, and who passed away. Also, is the property the main home of the surviving spouse? Did the surviving spouse acquire the property by inheritance or was the surviving spouse a part owner prior to the passing of the deceased spouse?

Opus 17

Level 15

"In a jointly owned property does a surviving spouse get a step up in cost basis?"

Sometimes, but more information is needed.

TomD8

Alumni - Champ

"Sometimes, but more information is needed."

Such as:

Was the property held in a trust?

If so, was the trust revocable or irrevocable?

Did the joint owners live in a community property state?

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

demitx475Author

Level 3

@TomD8, @Opus 17, @rjs My parents bought some property in VA in the 70's, the deed was in both names.

My dad passed away in 2001. My mother put the property in an irrevocable trust some 15 years later. She is still living. The property has been sold this year. I am trying to figure out the cost basis. Would it be the basis when she created the trust. I don't think it would. Would the basis be the purchase price of her half plus the stepped basis she would have inherited from my dad at his death? Or would that even apply?

I have some stock that is not publicly traded in the same situation. The stock is supposed to be sold at the end of this year. So I have the same question about that stock.

Thank you for the information.

Opus 17

Level 15

@demitx475 wrote:

@TomD8, @Opus 17, @rjs My parents bought some property in VA in the 70's, the deed was in both names.

My dad passed away in 2001. My mother put the property in an irrevocable trust some 15 years later. She is still living. The property has been sold this year. I am trying to figure out the cost basis. Would it be the basis when she created the trust. I don't think it would. Would the basis be the purchase price of her half plus the stepped basis she would have inherited from my dad at his death? Or would that even apply?

I have some stock that is not publicly traded in the same situation. The stock is supposed to be sold at the end of this year. So I have the same question about that stock.

Thank you for the information.

In general, your mother would have received a partial stepped-up basis in 2001, so her basis in 2008 would have been half the purchased price, plus half the fair market value in 2001, plus the cost of any permanent improvements they have made. I don't know anything about selling property placed in trust accounts, but the basis in 2008 when the trust was created would be as I described.

Stock in a jointly held stock account would be treated similarly, purchase price with a partial basis adjustment in 2001. If the stock was solely owned by the wife, I don't think she gets a stepped up basis, and if the stock was solely owned by the husband, the wife probably gets a fully stepped up basis, but someone else should confirm that.